Introduction Success in a joint venture can be expected when Joint Venture Agreements are set up right and the

parties know their duties well. Lawyers who understand the work culture and legal environment of both the jurisdictions should be involved in drafting Joint Venture Agreements. nternational joint ventures have special features which are different from domestic joint ventures. Special efforts are re!uired by all the parties involved to make an international joint venture successful. http"##madaan.com#jvsuccess.html Performance $he act of performing% of doing something successfully% using knowledge as distinguished from merely possessing it% &they critici'ed his performance as mayor(% &experience generally improves performance(. $he act of performing% the carrying into execution or action% execution% achievement% accomplishment% representation by action% as) the performance of an undertaking of a duty. http"##ardictionary.com#*erformance#+,-. http"##thinkexist.com#dictionary#meaning#performance Performance Indicator A *erformance ndicator or /ey *erformance ndicator 0/* 1 is an industry jargon term for a type of 2easure of *erformance. /* s are commonly used by an organi'ation to evaluate its success or the success of a particular activity in which it is engaged. Sometimes success is defined in terms of making progress toward strategic goals) but often) success is simply the repeated achievement of some level of operational goal. http"##en.wikipedia.org#wiki#*erformance3indicator Categorization of indicators /ey *erformance ndicators define a set of values used to measure against. $hese raw sets of values) which are fed to systems in charge of summari'ing the information) are called indicators. ndicators identifiable as possible candidates for /* s can be summari'ed into the following sub4categories" Quantitative indicators which can be presented as a number Practical indicators that interface with existing company processes. Directional indicators specifying whether an organi'ation is getting better or not

Actionable indicators are sufficiently in an organi'ation5s control to effect change. Financial indicators used in performance measurement and when looking at an operating index /ey *erformance ndicators) in practical terms and for strategic development) are objectives to be targeted that will add the most value to the business. $hese are also referred to as /ey Success ndicators. http"##en.wikipedia.org#wiki#*erformance3indicator Performance Measurement *erformance measurement is the process whereby an organi'ation establishes the parameters within which programs) investments) and ac!uisitions are reaching the desired results. $his process of measuring performance often re!uires the use of statistical evidence to determine progress toward specific defined organi'ational objectives. http"##en.wikipedia.org#wiki#2easure3of3*erformance The Reason for Measuring Performance -. To Evaluate how well is public agency performing. $o evaluate performance) managers need to determine what agency supposed to accomplish. 6. To Control how can managers ensure their subordinates are doing the right thing. +. To udget 7udgets are crude tools in improving performance. *oor performance not always may change after applying budgets cuts as disciplinary actions. Sometimes budgets increase could be the answer to improving performance. Like purchasing better technology because the current ones are outdated and harm operational processes. So decision highly influenced by circumstance) you need measures to better understand the situation. .. To Motivate 8iving people significant goals to achieve and then use performance measures4 including interim targets4 to focus people9s thinking and work) and to provide periodic sense of accomplishment. :. To Celebrate ;rgani'ations need to commemorate their accomplishments4 such ritual tie their people together) give them a sense of their individual and collective relevance. 2ore over) by achieving specific goals) people gain sense of personal accomplishment and self4worth 0Locke < Latham -,=.1.

>. To Promote ?ow can public managers convince political superiors) legislators) stakeholders) journalists) and citi'ens that their agency is doing a good job. @. To !earn Learning is involved with some process) of analysis information provided from evaluating corporate performance 0identifying what works and what does not1. 7y analy'ing that information) corporation able to learn reasons behind its poor or good performance. =. To Im"rove what exactly should who4 do differently to improve performanceA n order for corporation to measure what it wants to improve it first need to identify what it will improve and develop processes to accomplish that. http"##en.wikipedia.org#wiki#2easure3of3*erformance #hat is $oint venture% A joint venture or strategic alliance is a form of partnership where businesses come together to share knowledge) markets) and profits. Joint ventures can take on various forms. Small companies can band together to take on the goliaths of their industry. 7ig companies can form alliances with !uicker and nimbler small businesses. And small companies have the opportunity to forge strategic alliances with big name companies for expanded geographic reach. http"##sbinformation.about.com#cs#bestpractices#a#jointventure.htm A joint venture 0JV here after1 is a legal entity formed between two or more parties to undertake an economic activity together and sharing the risk in formation. $he parties agree to create) for a finite time) a new entity and new assets by contributing e!uity. $hey both exercise control over the enterprise and conse!uently share revenues) expenses and assets. $here are other types of companies such as JV limited by guarantee) joint ventures limited by guarantee with partners holding shares. ;n the other hand) when two or more persons come together to form a temporary partnership for the purpose of carrying out a particular project) such partnership can also be called a joint venture where the parties are Bco4venturersB. 7ut here what we want to mean by joint ventures that is little bit different from co4venture concept. http"##en.wikipedia.org#wiki#Joint3ventureCJoint4Ventures http"##www.wisegeek.com#what4is4a4joint4venture.htm #h& 'oint (entures% As there are good business and accounting reasons to create a joint venture 0JV1 with a company that has complementary capabilities and resources) such as distribution channels) technology) or finance) joint ventures are becoming an increasingly common way for companies

to form strategic alliances. n a joint venture) two or more BparentB companies agree to share capital) technology) human resources) risks and rewards in a formation of a new entity under shared control. http"##www.-DDDventures.com#business3guide#jv3main.html International 'oint (entures nternational Joint Ventures 0 JVs1 are becoming increasingly popular in the business world as they aid companies to form strategic alliances. JVs are legally and economically separate organi'ational entities created by two or more parent organi'ations that collectively invest financial as well as other resources to pursue certain objectives. JVs are typically used when the re!uired integration between the partners is high and the venture business is characteri'ed by uncertainty and decision making urgency 0Eo' < ?amel) -,,=% Luo) 6DDD% Arino < Feuer) 6DD.1. Although an overwhelming majority of international joint ventures involve only two parent firms 0one from a foreign country and the other from the local country1) some ventures may consist of multiple participants 0Schuler < $ari!ue) 6DD:1. Joint ventures that are launched by home4country based 0foreign1 and host4country based 0local1 firms are the dominant form of joint venture partnership 07ouchet et al) 6DD.1. 7ecause the creation of an JV involves establishing an independent organi'ation) the need to establish a separate set of ?F policies and practices is particularly evident. http"##ijvcomplexity3G6Dschulertari!ueG6D4ingmar Reasons for International 'oint (entures nternational joint ventures have become a major form of entry into global markets 0Hrnst < ?alevy) 6DD.% Hvans) et al.) 6DD61. Luo 06DDD1) Schuler et al. 06DD.1) and ?arrigan 0-,=>1 suggest that there are many reasons that companies form JVs. )no*ledge and !earning n many industries) increasing global competition and unabated

;f the many reasons) a particularly important reason) as far as ?F2 is concerned) is knowledge sharing and transfer. technological advancement have resulted in a wide range of cross4border collaborative partnerships intended to access knowledge) skills) and resources that cannot be internally produced by organi'ations in a timely or cost4effective fashion 0Iarula < Euysters) 6DD.1. ;rgani'ational learning has long been considered a key building block and major source of competitive advantage. JVs create uni!ue learning opportunities for the partner firms. 7y

definition) JVs involve a sharing of resources. $his access can be a powerful source of new knowledge that) in most cases) would not have been possible without the formal structure of an JV. http"##ijvcomplexity3G6Dschulertari!ueG6D4ingmar Efficiencies and Economies

n addition to the growing importance of learning from JVs another significant reason is to gain and retain management and organi'ational efficiencies and economies. $hese efficiencies and economies can result from combining operations) building upon the experiences of existing management and taking advantage of the latest in technologies) e.g.) when establishing a new facility. http"##ijvcomplexity3G6Dschulertari!ueG6D4ingmar Control

Jithout the ability to exercise control) it can be more difficult for a parent to establish conditions to maximi'e learning for itself) and its partners) or perhaps even the JV system) and to also gain and retain the managerial and organi'ational economies of scale and efficiencies. http"##ijvcomplexity3G6Dschulertari!ueG6D4ingmar Coo"eration

$hus) while control is important) cooperation is e!ually critical in helping to enhance the JVs chances of successes and the learning opportunities of the parents 0 nkpen < $sang) 6DD:1. Kurther in pursuing efforts of cooperation and attempts to control is the element of trust. ndeed) trust is also central to learning and management efficiencies. Jhile an important need) the treatment of trust is left for further discussion in another chapter. t is) however) found in all stages of the four stage model of JVs. http"##ijvcomplexity3G6Dschulertari!ueG6D4ingmar

Factors affecting I'(

Economic Factors Poor formation and "lanning

*roblems that arise in joint ventures are usually as a result of poor planning or the parties involved being too hasty to set up shop. Kor example) a marketing strategy may fail if a product

was inappropriate for the joint venture or if the parties involved failed to appropriately asses the factors involved. *arties must pay attention to several analyses both of the environment and customers they hope to operate in. Kailure to do this sets off a bad tone for the venture) creating future problems. +ne,"ected "oor financial "erformance

;ne of the fastest ways for a joint venture is financial disputes between prties. $his usually happens when the financial performance is poorer than expected either due to poor sales) cost overruns or others. *oor financial performance could also be as a result of poor planning by the parties before setting up a joint venture) failure to approach the market with sufficient management efficiency and unanticipated changes in the market situation. A good solution to this is to evaluate financial situations thorough before and during very step of the joint venture. Management Problems

;ne of the biggest problems of joint ventures is the ineffective blending of managers who are not used to working together of have entirely different ways of approaching issues affecting the organi'ation. t is a well4known fact that many joint ventures come apart due to misunderstanding over leadership strategies. Kor a successful joint venture) there has be understanding and compromise between parties) respect and integration of the strengths of both sides to overcome the weaker points and make their alliance stronger.

Ina""ro"riate Management -tructure

n a bid to have e!ual rights in the venture) there could be a misfit of managers. As a result) there is a major slowdown of decision making processes. Eaily operational decisions that are best made !uickly for more efficiency of the business tends to be slowed down because there is now a Lcommittee9 that is in place to make sure both parties support every little decision. $his could distract from the bigger picture leading to major problems in the long run. Economic Environment of I'( $he ultimate goal of a successful JV partnership is more customers and a stronger body. $o ensure a JV5s partnerships are as profitable as possible) it helps to look at them from the customer9s point of view. $he features a JV partnership should aim to address for an effective marketing campaign" Mhanneling the expertise and strengths of both parties to maximi'e value

for the customers and stakeholders while downplaying the weaknesses and presenting a united font. Cultures of I'( Jhen a joint venture is formed) it is literarily an attempt at blending two or more cultures in the hope of leveraging on the strength of each party. Lack of understanding of the cultures of the individual parties poses a huge problem if not addressed. A common problem in these multi4 cultural enterprises is that the culture is not considered in their initial formation. t is usually assumed that the cultural issues will be addressed later when the new unit has been created. Nsually) compromises are reached and certain cultural from the parties are kept on while others are others are either out rightly discarded or modified http"##en.wikipedia.org#wiki# nternational3Joint3Venture 0 JV1 CHconomic3Kactors

Measures of 'oint (enture Performance

2ethods for evaluating the performance of joint ventures can be based on four approaches" the economic) strategic) behavioral and learning approach 0*robst and 7Ouchel) -,,.% 7Ouchel et al.) -,,=1. Hconomic approaches are generally output4 oriented with the purpose of deciding whether joint ventures are increasing the value of the partner companies. $he theoretical base for the economic approach to performance evaluation is founded on the theory of financial and capital markets and involves examining measures such as free cash flow) return on investment) net yearly profit) increases in shareholder value or productivity.

A successful $oint venture can offer. -. access to new markets and distribution networks 6. increased capacity +. sharing of risks and costs with a partner .. access to greater resources) that is) Speciali'ed staff) technology and finance

Pre"aring for a -uccessful '( Action steps to prepare for a successful joint venture. usiness -trateg& 7egin with a sound) well4articulated strategy. 7efore moving forward) determine and explain why you wish to enter into a joint venture) why you have chosen your partner0s1) and what you hope to achieve. Eefine involvement 0managerial) capital) etc1 of the parent companies and how long the JV will last. /uman Resources 0/R1 -trateg& Eevelop ?F strategies that align and support the goals of the JV" develop a distinct identity and culture for the new organi'ation% communicate aggressively to employees% and establish distinct career paths) management) and a means of return for employees transferred to the JV. Mreate compensation) incentive) and retention programs tied to the success of the JV. 2aintain open communication between the ?F departments of the parents and the JV. !eadershi" Eefine a process for leadership selection that5s seen as fair and credible) and name top4tier leadership as soon as possible. Look for key indicators of leadership potentials such as behavior) past experience) and measurable outputs. Communication $o engage and motivate your employees) communication should be fre!uent and used to create a common vision) establish a connection with leadership) explain the new rules) support the individual transition process) aid in retention) and ultimately) define the new organi'ation in terms of BJeB instead of an B tB or B$heyB. Share as much information as you can) and never sugar4coat or make false promises.

2 -ecrets of -uccessful 'oint (entures 7usiness is all about relationships. Pour small business can5t exist alone on an island but in partnership with others. Korming joint ventures and strategic alliances are a necessity today. According to 7oo' Allen ?amilton) over 6DG of the revenue generated from the top 6)DDD N.S. and Huropean companies comes from alliances. Io business of any si'e can afford to ignore the rewards of joint venturing. Eon5t rush into a joint venture without understanding the key concepts of strategic alliances and partnership ventures. *oorly executed and badly planned joint ventures are doomed from the start. Learn the secrets of joint venturing http"##sbinformation.about.com#b#6DD@#D+#D.#.4secrets4of4successful4joint4ventures.htm 2 -ecrets Mompanies that build successful joint ventures follow the same systematic process. Although the costs of forming alliances are inexpensive) the cost of not planning out the partnership is far greater in lost profits and failed relations. -. -et Clear 3oals. /now from the beginning what you want to accomplish. s it reduced product costs) expanded sales) or market credibilityA Pour partners5 goals may be different but complementary to yours. 64 Find a Partner. $he best partnership is based on a mutual win4win relationship. $ake the time to locate a company with an honest interest in joint ventures and a similar corporate culture. f your small business is focused on long4term customer relations and your strategic partner cares about gaining market share !uickly) then your two cultures may clash. +. Plan the (enture" 2ap out your negotiation tactics and understand the legal aspects of the deal. /eep win4win agreement in mind. .. Manage the Relationshi". ;nce a winning joint venture is formed the real work takes place. A good alliance is like a marriage. t is built on communication) trust and understanding. Joint ventures and strategic alliances can be a positive outcome for all parties involved. $ake the time to understand the process and your small business will be well positioned into the future. http"##sbinformation.about.com#cs#bestpractices#a#jointventure.htm

Chec5list for a -uccessful 6utsourcing $he following are some of the secrets of a successful international joint venture" -. Nnderstanding cultural backgrounds of all the countries involved 6. Nnderstanding legal and regulatory regime of all the jurisdictions involved +. Iegotiating win4win contract .. 8iving leeway for international contingencies and environment :. ?aving Momprehensive Joint Venture Agreements which lays down a road map of duties and obligations of all the parties involved >. nvolving lawyers from all the jurisdictions early on

@. ?aving a workable and efficient Eispute Fesolution 2echanism =. $ermination $erms and Monditions

Advantages of 'oint (enture Speed) Access) sharing of resources and the leveraging of underutili'ed resources) ?igh profits) 7ack end income) Low or no risk opportunities and massive leverage. Sharing of Hxpertise of two groups Sharing of loss nvestment sharing *rovide companies with the opportunity to gain new capacity and expertise Allow companies to enter related businesses or new geographic markets or gain new technological knowledge access to greater resources) including specialised staff and technology sharing of risks with a venture partner Joint ventures can be flexible. Kor example) a joint venture can have a limited life span and only cover part of what you do) thus limiting both your commitment and the business5 exposure. n the era of divestiture and consolidation) JV9s offer a creative way for companies to exit from non4core businesses. Mompanies can gradually separate a business from the rest of the organisation) and eventually) sell it to the other parent company. Foughly =DG of all joint ventures end in a sale by one partner to the other. http"##www.rpemery.com#articles#advantages3and3disadvantages3jv.htm http"##answers.yahoo.com#!uestion#indexA!idQ6D-DD66-D=+,+@AAJam@F

Disadvantages of 'oint (enture *ossibility of being ripped off or disappointed by unscrupulous and unprofessional JV partners) ?urting your reputation and#or customers and associates by associating with the wrong people) even unknowing Sharing of Montrol of 7usiness Sharing of *rofits 7ad decision if any taken will be born by Mompany as a whole. t takes time and effort to build the right relationship and partnering with another business can be challenging. *roblems are likely to arise if" $he objectives of the venture are not -DD per cent clear and communicated to everyone involved. $here is an imbalance in levels of expertise) investment or assets brought into the venture by the different partners. Eifferent cultures and management styles result in poor integration and co4operation. $he partners don5t provide enough leadership and support in the early stages. Success in a joint venture depends on thorough research and analysis of the objectives. http"##www.rpemery.com#articles#advantages3and3disadvantages3jv.htm I'(s -+CCE-- 6R FAI!+RE JVs enable the partner firms to achieve that which may not be achievable as independent entities. Kor example) the local firm can avoid the cost of developing world class products by forming an JV with an international company. 7y gaining access to a local firm9s network a foreign company can avoid the cost of establishing distribution and supply relationships in the local market. Hven though the advantages of this form of market entry strategy are many) recent history of international JVs is replete with failures. 7Rchel 06DD-1 contends that between 6:G and :DG of JVs fail within six years. Larimo 06DD61 holds that only -.G of JVs involving NS and Japanese partners lasted more than ten years. Fesearch shows that over @DG of JVs in Asia *acific end in failure within ten years. Lyons 0-,,-1 asks if JVs are simply fashionable or indicative of a fundamental change in the business world. ?e further asserts that organisations would really prefer to develop independently but are prevented from doing so by circumstance) thus for them) an JV represents some degree of failure. -uccess. 7 $he success rate for JVs is researched to be :+G) which illustrates numerous arguments to the success of JVs and the attainment of stakeholder objectives. $he emerging markets of Asia provide growth and profit potential for organi'ations from saturated domestic markets. $he JV alternative facilitates the maximi'ation of the partner firm9s core competencies

and brand strength in these markets. $his however) is contingent upon the level of commitment) or resources available versus the short4term or even opportunistic decision motivated) by the relative ease of entering the market in a joint venture. $his also raises the !uestion" how many developed firms entering into JVs with a local partner as a market entry strategy expect it to be a transitional stepA Failure. 7 n the context of this study failure is defined in its financial terms as absolute failure) where the revenues generated are insufficient to sustain the JV) or relative failure) where the return on investment is significantly less than the respective partners could achieve by allocating similar resources to other opportunities. $he concept of failure is further complicated by the interpretation of termination) in considering the parent firms performance across JV life cycle stages. ?ence) the concept of failure itself is flawed. Feuer 06DDD1 contends that both the JV formation and termination stages hold out opportunities for parent firms to create value. $he pursuit of profit by business organi'ations is complex. Kor listed organisations) it is necessary for their involvement in JVs to enhance investor confidence. $his underscores the significance of stock market reactions to the formation and dissolution of joint ventures. JV failure can result from differing managerial ideologies of the respective partners that effectively make an JV unworkable. Hven in such a situation it is possible and usually the case for one of the partners to have benefited from the joint venture. $he !uestion is exactly how should JV failure be determined and definedA Kor example) the critical variable could be the economic performance of the JV such as F;IA or simply revenues generated by the JV. Alternatively success may be defined in terms of the achievement of JV objectives for example market share. $hese concern only the JV in its own right. ?owever) benefits can accrue to the parent companies) such as technology transfer) local market expertise) ac!uisition of key accounts) supply and distribution relationships that continue after the dissolution of an JV. Hven the ac!uisition by one partner of the other9s e!uity can justifiably be considered successful.

-uccess or failure need to be defined in the context of the objectives of the JV partner firms. t can be inferred from the continuing growth of international joint ventures that benefits such as rapid market entry and lower risk) enhanced competitiveness) etc. can be achieved. Learning however) is a less fre!uently discussed benefit. ;rganisational learning is fundamental to the attainment) maintenance) or enhancement of competitive advantage. t is argued that a firm9s involvement in JVs can contribute significantly to organi'ational learning. Johannson 06DD.1

discusses the concept of learning organisations) and contends that a firm9s competitive advantage is not simply derived from existing assets and competencies but increasingly from the ability to innovate) to create new products) develop new markets and distribution channels. Success in emerging markets provides the western partner with an invaluable learning experience. $hat is) learning to compete with local firms whose competitive advantage was developed with limited resources and in highly price sensitive markets. Hxamples include% ?aier) consumer white goods from Mhina) Lifan) motorcycles from Mhina and many more. $his is the counter argument to competing in state of the art markets Eornier) et al. 0-,,,1 that suggests that firms need to compete with the market leaders and key global competitors within their industry in order to enhance their own competitiveness.

C6MM68 I'( )E9 PERF6RMA8CE I8DICAT6REata available from research concerning east#west JVs in Hast4Asia have identified key variables critical to regional JV performance. $he fre!uently cited reasons for poor JV performance or even failure were identified and listed below"4

+nsuccessful Tr& searching for 8+MMI Cor" 0To&ota and 3M '(14 Located in Malifornia) the plant produces cars for both 82 and $oyota) thus the Binternational joint ventureB is simply a JV between companies not domiciled in the same country. A joint venture is any business arrangement where two or more partners decide to pursue business together. $here is a governing contract and each partner throws in assets or money. ;ne partner usually is the operator or general partner. An example is 2itsubishi and Mhrysler when they manufactured a car model together. $his arrangement is common in oil and gas exploration. Hxxon and 2obile have joint ventures in the Iorth Sea where the JV operates oil platforms and produces oil and gas. International 'oint (entures in India. #hat:s the success ratio%