JOINT VENTURE

Joint Venture



Joint Venture

Introduction

The joint venture selected for this paper is between Rolls-Royce and Daimler for Tognum AG. This joint venture is of particular importance as it brought various strategically changes in the companies including the increase in share. Daimler AG and Rolls-Royce Holdings plc have all relevant regulatory approvals from the authorities for the Acquisition of Tognum. Merger occurs when two or more companies decide to pool their assets and form a new company. There is talk of acquisition when a company buys the shares or assets of other company to have control over it without carrying out the merger of their heritages. The ultimate goal is to create value. Many processes in Mergers and Acquisitions are caused by the need of entrepreneurs to develop and solidify its activities in a particular industry, trying to stay on and consolidate it on the market. However, others seek to gain profit in the short term and seek to acquire a company with the objective of increasing its value and then sell at a higher price. The common factor in both is the stimulus to add value to the acquired company. There are three main structures of mergers.

Constraints in Gathering the Information

The information gathering for this project required the data collection through the secondary sources. The online journals and libraries were of particular importance since they gave a comprehensive account of the companies and their joint venture strategies. Many examples from previous studies, which have focused on the producing synergies, are one of the main achievements that can be gain through mergers and joint ventures (Hopkins,1998,279). In accordance with the statement of above the best way of finding or to analyse, the desired effect is through operational performance change in the firm after such activity. According to the Healey et al (1992), all these literatures have proven the use of data related to accounting such as incomes and flow of expendable cash has as their main base of research (Hopkins,1998,279). Herman & Lowenstein (1988) who collected data from the year 1975 to the year 1983 found no critical improvements in performance of the companies even after the merger and acquisitions comparing to incomes and flow of cash. Even, though, Healey et al (1992), found three percent improvement in operational performance of the companies after the M&A, use of similar data by other researchers with improved methodology, however, did not find any changes that were significant in nature (pp.43). However, some of the difficulties that I faced during data collection were to collect the statistics about the success or failure of the joint venture as the statically data is not routinely published, however, the qualitative information did provide an overview of the success of the joint venture as discussed in the following section (Jensen, 1983,16). After the merger and acquisition, companies start to use each other's plants, building equipment and labour, but also have to adapt to each other's internal working environment, the governance and the way things handled in a particular organisation ...