Joint venture

Résumé du document

A joint venture is the long-term commitment of funds, facilities and services by two or more
legally separate interests, to a combined enterprise for their mutual benefits.

A joint venture need not be a separate legal entity or company. Other forms of joint ventures include an agreement to work together formalized through the Heads of Agreement or a Strategic Cooperation Agreement.

A Manufacturing Joint Venture

Joint ventures are most commonly entered into to get around a trade barrier that is preventing your entry into a target market. Another way of circumnavigating a trade barrier is to establish a wholly owned manufacturing or assembly subsidiary in an overseas market; however, many companies find the joint venture route a better option. A joint venture achieves many of the advantages of a fully owned operation, without the long lead-time and at a fraction of the cost.

Extraits

[...] The team has prepared a comprehensive business strategy for the region which will be presented to the company's board, which plans to increase its exports by Indonesia, which sells around 2m two-wheelers annually, is a very big market for step-thru, while motorcycle sales account for just around 3 Lacs units. Honda is a clear leader with over 60% of the market followed by Yamaha, Suzuki and Kawasaki. Chinese and Taiwanese two-wheeler companies have, in recent years, been active in the Indonesian market. Besides, for Bajaj Auto, its proposed manufacturing unit in Indonesia will open up big opportunities in adjoining countries. The plant has also enabled the company escape the high import duties that are levied in Indonesia. [...]

[...] A Manufacturing Joint Venture Joint ventures are most commonly entered into to get around a trade barrier that is preventing your entry into a target market. Another way of circumnavigating a trade barrier is to establish a wholly owned manufacturing or assembly subsidiary in an overseas market; however, many companies find the joint venture route a better option. A joint venture achieves many of the advantages of a fully owned operation, without the long lead-time and at a fraction of the cost. What a Joint Venture Involves A joint venture involves: 1. [...]

[...] The objective is to expand its presence in Southeast Asia. Bajaj auto, which has set up its first overseas plant for two-and three wheelers in Indonesia, is keen to team up with a local partner to take on competition from market leader Honda and Yamaha. Bajaj Auto's technology partner Kawasaki also operates in Indonesia through subsidiary company Kawasaki Motors Indonesia (KMI). PT Abdi Raharja, owned by the Gobel group, is the sole distributor of Bajaj Auto two-and three wheelers in Indonesia. [...]

[...] A management voice for both parties 4. Equity participation by each partner LICENSING A license is a formal agreement between two parties, whereby the licensor gives something of value to the licensee in exchange for certain undertakings and payments from the licensee. Whereas licensing can, to some degree, be regarded as a deal, a joint venture will only work if both parties have an ongoing participation through shared contributions and responsibilities. Compared to licensing, joint ventures have the following potential advantages: Better returns through equity participation as opposed to royalties Greater control over production and marketing Better market feedback A direct identity and presence in the market Less chance of your partner becoming a competitor A more effective pooling of each partner's strengths Benefits There must be real benefits for both partners. [...]