An international Joint Venture is an equity agreement in which foreign and local business organization co-own a business by pooling their resources together, share the risks associated with the business as well as exercising managerial control to operate an autonomous business in order to make profits or to enjoy economic and premeditated advantages.
The success of such ventures depends on a number of factors as. Some of the factors that determine the success of Joint Ventures include:
- Cultural factors- the way of life among different partners in a joint venture has a significant influence on the success of the business. Every society is associated with unique cultural aspects manifested in terms of traditions, values, social norms and beliefs. Some cultural practices and traditions that characterize a particular community are barbaric and inhibit competitive attitude in business. This makes it difficult to successfully have a joint venture with competition oriented group.
- Political factors-some host countries are characterized by unceasing power struggles that make it difficult to accommodate foreign partners in joint ventures. For example, the level of government stability is a determinant on the success of joint ventures. All the government policies will influence the decisions made by the foreign partners in the joint ventures.
- Cross staffing-at times it becomes difficult to agree on the ration of staffing from the two co-owners. For instance, the host partner may want to dominate the staff making it difficult to co-exist peacefully in a joint venture.
- Shared benefits-the ratio on which the profits generated is shared significantly influence the continuity of a joint venture. In cases where the host partner tends to be biased in profit sharing, conflicts disagreements may arise making it difficult to succeed in a joint venture.
- Societal factors-an understanding of all the government agencies the chain of commands in the host nation by the foreign partner in a joint venture significantly influences the success of the joint venture.
- Managerial factors-the choice of a business partner to form a joint venture with is always a difficult decision to make. Usually, the management style adopted by the joint partners between the local and foreign partner faces managerial challenges.
After launching the product in India, Monsanto has a lot to do in order to cope up with the unpredictable regulatory approvals. Usually, competitive market structures pose various challenges to the operators. Some of the unpredictable regulatory approvals that may arise from time to time include changing prices, registration bureaucracies.
In addition, adopting flexible policies that are subject to change depending on circumstances will be essential for the Montana Company to deal with these forces. Flexible operations and policies allow a business to accommodate changes that may arise in a competitive market.
Moreover, Montana Company has to consider the interconnections between the pricing, controlling authorizations and the international competitiveness of the innovation for manifold supply chain. This should be coupled with the discovery of a developing business model that offers an assurance for more maintainable aftermaths. In other words, Montana should embrace long term global approaches.
Lee, J. Y. (2002). Identifying key factors for successful joint venture in India . Industrial Management & Data Systems, 102/2, 98±109.
Robert Klassen, R. C. (2012). Monsanto Company - Doing Business in India. General Management/Strategy, Internationa, 1-19.