PROBLEMS IN JOINT VENTURES

Problems in Joint Ventures



TABLE OF CONTENTS

TERMS OF REFERENCE1

MY PROFFESION1

MY CLIENT1

WHAT MY CLIENT WANTS FROM ME1

OVERVIEW OF THE SITUATION2

POTENTIAL ISSUES3

ANALYSIS OF THE SITUATION5

Strengths:6

Opportunities:8

SOLUTIONS & RECCOMENDATIONS10

CHOOSING THE RIGHT PARTNER:10

LIMITED LIABILITY PARTNERSHIP:11

REVIEW BUSINESS STARETEGIES:11

PLAN THE JOINT VENTURE:12

PROPER COMMUNICATION:12

DECIDE ON MANAGEMENT STYLE:13

DECIDE UPON RESOURCE SHARING:14

DECIDE ON PRICING & MARKETING STRATEGIES:14

FORECASTS & OUTCOMES15

REFERENCES:16

Problems in Joint Ventures

TERMS OF REFERENCE

MY PROFFESION

I did my masters in “Business Consultancy” and today I'm running a business consultancy firm. My firm provides expert advice on various business related issues to our clients.

MY CLIENT

My client, Mr. XYZ is a businessman who was initially running his own private business & now he is planning to enter into a joint venture with his business competitor, Mr. ABC to increase his market share & presence in the market & to gain advantage of the technology being used by his competitor.

WHAT MY CLIENT WANTS FROM ME

My client, Mr. XYZ now wants some professional help from my side relating to the joint venture. Companies enter a joint venture when they pool their resources & capabilities to reach a particular goal, & in doing so they also share the risk & reward associated with it. Mr. XYZ is seeking my help in this regard & wants some advice from my side before he goes for the deal. He wants to the pros & cons associated with a joint venture, & problems which they could face in future.

OVERVIEW OF THE SITUATION

Mr. XYZ & his business competitor, Mr. ABC are involved in the business of FMCG & both the companies are producing products i.e. Apple Juice, Mango Juice & detergents. The industry of Fast Moving Consumer Goods usually deals with the processes related to the management of supply chain the goods which are usually consumed by the customers in their daily lives. These products are usually consumed very quickly by the consumer. The operational cost of being the FMCG is very low that's why there is usually a price war going on between the companies operating in the said industry, & the company with more strong distribution network is likely to take away the major share of the business. That was the reason that induced Mr. XYZ & Mr. ABC to pool their resources & expertise & gain & increase their market share & profitability.( Visconti, 2003 P. 02-05) Both the companies are operating in the same market & now they are planning to combine & share the business which is likely to be beneficial to both the companies. Because a joint venture could give them;

More resources are available

Capacity maximization

Better technical skills

Improved access to markets & distribution channels

POTENTIAL ISSUES

Before going ahead my client must decide upon the type of joint venture he wants to choose. The types of joint venture are;

One option is to agree to co-operate with your partner in a limited & specific way.

2nd option is to set up a separate joint venture business, which could include setting up a new business which would handle a ...