International joint venture is an arrangement between two or more organization to cooperate as a team through sharing of resources such as technology, human resource. The concept is majorly applicable in airline industry, construction industry to which the parties entre into agreements for strategic reasons. It helps members to grow quickly, increase productivity and generate greater profit. Despite all these advantages, it has gradually faced several problems as far as the operation is concerned. It suffers risk particularly as far as control is concerned since some partners feel like they are more superior to others; improper agreement to run the business is also attributed to the failure of international venture to last. Inappropriate management technique to smoothen the operation is also has been a factor to poor performance of international venture, the variation in business objectives makes international venture a risky business to engage in. lack f proper leadership skills to run the business is also a challenge. These reasons triggered the researcher into finding into detail the major risk associated with international ventures.
Background of study
International venture are formed under formal agreement for specific functions perhaps to tap market niche, investment in businesses that requires high capital or share technology. Share risks and cost with partners and probably increase capacity. In nutshell it involves two or more business firms coming together through written agreement regarding their operation, profit sharing and probably how the profits are to be appropriated. Whereas many thought that it is bets strategy of going international in terms of business and that it is profitable it has turned out to be more risky than thought. Issues like fluctuating currency, poor financial performance, conflict among members; poor leadership has led to a lot of uncertainty within the international environment. This has therefore elicited a research to investigate possible risks and their magnitude, formulate better ways of entering international market, better ways of managing the collaboration.
Objectives
Reference
The University of Iowa Center for International Finance and Development
A short course in international joint venture by Alan Gutterman
Business Briefing 2009: Trade Policy Available from: http://www.intracen.org/btp/wtn/newsletters/2009/ip_6.htm
Cross-border joint ventures-getting the dispute resolution clause right
CIDB (2006). Round Table Consultative Forum for the Government Sector. Construction Industry Development Board, Kuala Lumpur, Malaysia
Flanagan (1995) Flanagan, R. & Norman, G., (1997) Risk Management and Construction. Blackwell Science
Hamimah Adnan (2004). Joint Venture in Malaysian Construction Industry, Factors Critical to Success, Unpublished
