Joint Venture

Nitish Bhardwaj P301112FMG230

Abstract
This research paper is about how Joint Ventures evaluate the perception and understanding of two companies come together and moves towards a same path to achieve its goal for better future.

It is a better understanding of two companies comes as a whole to achieve its common objectives. For entering into new concept or country JV is required, so that company can able to understand the current mar et situation and ta e initiative to achieve the targets of the company as well as loo ing for better result towards society.

Introduction WHAT IS A JOINT VENTURE?

! JV can be defined as any understanding whereby two or more parties assist in order to run a business or to complete a business objective. This assistance may ta e various forms, such as equity"based or contractual JVs. It may be on a long" term basis involving the running of a business in infinity or on a limited basis connecting the understanding of a particular project. It may involve an entirely new business, or an e#isting business that is e#pected to significantly benefit from the introduction of the new participant. ! JV is a highly fle#ible concept. The nature of any particular JV will depend to a great e#tent on its own primary facts, sort and on the resources and needs of the concerned parties. JV may be shortened as a symbiotic business alliance between two or more companies. JOINT VENTURES IN INDIA
$niversal resources of the partners are mutually shared and put to use. It is an effective business strategy for enhancing mar eting, positioning and client acquisition which has stood the test of time. The alliance can be a formal contractual agreement or an informal understanding between the parties.

%lobal proliferation of business and commerce has given an international dimension to JVs. &orporate entities across the globe see cross"border alliances to share the resources, opportunities and potential to deliver cutting edge performance. 'uch alliances are designed to suit the commercial requirements of parties and vary from a mere transitory arrangement for one partner to establish its presence in a new mar et to a calculated step towards a full merger of the technologies and capabilities of the partners.

Motivation
My interest in finance motivates me to do that research and able to know what HR practices involve in it. Joint venture is a combination of two companies this also able to make me think what HR implications involve in companies, when they join hands to ether what are the aspects they need to work upon it for employees benefit, than only they can perform their task well and do their job as per company re!uired.

Objectives
PURPOSES FOR ESTABLISHING A JV JVs are envisaged as alliances that yield benefits for the JV partners by offering a platform to attain their business goals which would be difficult or uneconomical to attain independently. (stablishing a JV with an ideal partner provides a fast way to leverage complementary resources available with the other partner, share each others) capabilities, access new mar ets, strengthen position in the current mar ets, or diversify into new businesses. India Inc. has come of age and is not just an investment destination but also an aggressive investor. Indian companies have e#hibited, in the recent past, their ambition to venture into the quest for overseas e#pansion. The main stumbling bloc s for Indian companies in achieving e#pected levels of global presence are deficiencies in terms of product quality, technology, infrastructure and even management processes. These deficiencies can be negated by way of an alliance with a foreign counterpart who is a strategic fit. !lliances between those possessing varying e#pertise and capabilities in technology, mar eting and distribution, etc. are necessary to meet the growing needs of modern business. Leveraging Resources *ith the globali+ation, access to labour, capital and technological resources have become driving forces for modern businesses to aim to achieve ,economies of scale.) Today, business commitments are far too large to be e#ecuted by a single company. From a wider perspective, the conduct of business mandates a huge pool of resources e#tending from massive financial bac up to plenty of s illed manpower. &ross"border business projects are all the more demanding and the best solution is to either outright acquire or share them by entering into a JV. &o"operation is a great way of reducing research and manufacturing costs while limiting e#posure. Ex !oiting "a abi!ities and Ex ertise
-arties to a JV may have complementary s ills or capabilities to contribute to the JV. or parties may have e#perience in different industries which it is hoped will produce synergistic benefits. The basic tenet of a JV is the sharing of capabilities and e#pertise of both the partners on mutually agreed terms. 'uch sharing grants a competitive advantage to the JV partners over other players in the mar et.

S#aring Liabi!ities ! JV also offers parties an opportunity to jointly manage the ris s associated with new ventures. Through a JV they can limit their individual e#posure by sharing the liabilities. *hen the liabilities and ris s are shared the pressure on each individual partner is correspondingly reduced. It reduces the ris s in a number of ways as the business activities of the JV can be e#panded with smaller investment outlays than if financed independently.

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Mar$et Access JVs are the most efficient mode of gaining better mar et access. &ompanies utili+e JV agreements to e#pand their business into other geographies, consumer segments and product mar ets. In the case of a cross"border JV, the involvement of a locally"based party may be necessary or desirable in countries where it is difficult for a foreign company to penetrate the mar et or where the local law limits the ownership structure by foreigners. For instance, in India, certain mar et sectors remain restricted for foreign investment and a local partner with a certain shareholding in the company is a regulatory necessity for commencing business and ma ing investments. These restrictions are discussed in further detail in a later section. %!exib!e &usiness Diversi'ication JVs offer many fle#ible business diversification opportunities to the partners. ! JV may be set up, as a prelude to a full merger or only for part of the business. It offers a creative way for companies to enter into non"core businesses while maintaining an easy e#it option. &ompanies can also resort to JVs as a method to gradually separate a business from the rest of the organi+ation and eventually, sell it off. In certain circumstances, JVs may be set up with strategic investors in the process of entering into a new mar et so as to initially provide the foreign participant local infrastructure and guidance but with a view to integrate the operations of the JV into the main company in the future. In this situation, the foreign participant may choose to acquire the local participant)s interest once the venture is up and running. This can be highly beneficial to both parties as the foreign party is able to establish itself in the local mar et while the local party gets a liquid e#it. (artners#i ! partnership firm created under the -artnership !ct, /012, is in many respects simpler than a company, and may perhaps be regarded as a halfway house between a corporate joint venture and a purely contractual arrangement. ! partnership represents a relationship between persons who have agreed to share the profits of business carried on by all or any of them acting for all. ! partnership JV or hybrid models are unincorporated forms of JV which represent the business relationship between the parties with a profit motive. This is reflected in the ta# regime, whereby partners are separately assessed even though the profits are computed as if the partnership were a separate entity. This JV has inherent disadvantages including unlimited liability, limited capital, no separate identity etc. *hilst ta# and commercial factors may sometimes lead to the use of such unincorporated vehicles, the majority of business ventures tend to use a corporate vehicle for establishing a JV, the share capital of which is divided between the parties to the JV. !s a result, partnerships are not normally used for major businesses e#cept by professionals such as solicitors and accountants or where there are specific ta# advantages.

Li)itations
Joint venture does not give the management of the company complete control because the
decisions are ta en by both the companies and therefore it can create problems if both companies do not agree on some issues.

It is difficult to integrate resources of companies entering into joint venture because both the
companies have different policies, culture etc3. and therefore a chance of joint venture becoming a success diminishes when two companies from different countries are involved. ! joint venture is a partnership. Though short"term, it ta es energy and efforts to establish a nourishing and effective relationship. 4espite the meeting of minds, the hearts and cultures of two companies may not be compatible. !lthough the partners in a joint venture strive to ma e their objectives clear, in the e#ecution stage, there still might be some confusions and misunderstandings which may ma e the venture less effective and profitable. Furthermore, there might be a greater than e#pected gap between two parties5 level of capabilities and e#pertise. 6ac of a strong sense of leadership and support may cause a non"harmonious wor ing relationship among the parties.

"o) an* (ro'i!e +a!Mart ,istor* -./0 1-..0 6earn how 'am *alton founded *al"7art, hear from former e#ecutives 4avid %lass and 4on 'oderquist, and see famous footage of 7r. 'am dancing the hula on *all 'treet. (#perience *al7art)s 8istory *al7art)s history is more than just the stores we5ve built, the partnerships we5ve made and the customers we5ve served. 'o much of our history is in the details. 'ee how *al7art began, how we grew and how our leadership has changed the retail industry. 1960s Walmart store 1 in Rogers, Arkansas. Retail Revolution 'am *alton5s strategy was built on an unsha eable foundation9 The 6owest -rices !nytime, !nywhere. 1962 :n July 2, /0;2, 'am *alton opened the first *almart store in <ogers, !r . 1967 The *alton family owned 2= stores, ringing up >/2.? million in sales. 1969 The &ompany officially incorporated as *al"7art 'tores, Inc. 1970s Walmart Goes National In the /0?@s, a decade of incredible growth, A7r. 'amA began to ta e *almart national, proving his vision5s widespread appeal. 2010 Bharti *almart, a joint venture, opened its first store in India. *almart committed >2 billion through the end of 2@/C to help end hunger in the $nited 'tates. *almart launched a global commitment to sustainable agriculture, aiming to strengthen local farmers and economies, while providing customers access to affordable, high"quality food. 2011 *ith the acquisition of 7ass7art in 'outh !frica, *almart surpassed /@,@@@ retail units around the world. The first *almart (#press stores were introduced in !r ansas. *almart established Dwalmartlabs, a hub for developing social, mobile and global platforms. 2012 *almart celebrated C@ years of helping people save money so they can live better. The company employs 2.2 million associates worldwide and serves 2@@ million customers each wee at more than /@,@@@ stores in 2? countries.

&#arti Enter rises Bharti was founded in /0?; by 'unil Bharti 7ittal. &harti's primary industry is in the field
of telecommunications via its subsidiary companies &harti (irtel )mobile telecommunications*, &harti +nfratel ),assive -elecom +nfrastructure provider* and &harti -eletech )wired telecommunication services, .omviva -echnolo ies and ,/-0 telephone handsets*. &y the year 2112 in a month of (u ust, &harti 3nterprises comes with an surprisin packa e and join hands with an international brand 4almart who lookin resources to come +ndia. -hey both tie up and in year 2115 they open up +st store in +ndia with name 6&est ,rice7.

Reco))endations2
By this term paper I would li e to show you or tell you that due to some laws, rules and regulations companies can)t able to come forward to ta e some initiate and effective steps to join their hands and wor together as whole. *hile study for research paper I just able to now that if govt. ta e some initiative and change their policies so they can attract more investors to invest in India as li e *almart did it by joining hands with Bharti.

RE%EREN"ES AND &I&LIO3RA(,42

'earch (ngines used9

/. www.google.com 2. www.wi ipedia.com 1. www.yahooanswer.com =. www.nishithdesai.com