An American-German venture, located in the United States, featured board meetings in which the Americans continually wanted to change some of the German operating procedures, which had been imported along with the product design.The Americans, on the other hand, believed the British were flying blind. The British could not understand why the Americans wanted all those numbers. The board of directors of one American-British joint venture continually disagreed about the amount of data required before a decision could be made.Some typical examples of conflicts illustrate this problem: The result can be confusion, frustration, and slowness in making decisions. At the board level differences in priorities, direction, and perhaps values often emerge, for the board of directors contains representatives from each parent. This last issue flares up when one parent believes that short-term performance is crucial while the other thinks that building a solid base for the future is more important. They can-and will-disagree on just about anything: How fast should the joint venture grow? Which products and markets should it encompass? How should it be organized? What constitutes good or bad management? The owners, unlike the shareholders of a large, publicly owned corporation, are visible and powerful. The problems in managing joint ventures stem from one cause: there is more than one parent. If the problem types can be avoided-or managed very carefully-joint ventures can be highly successful. I will examine the causes of joint venture difficulties and present evidence that not all joint ventures are prone to failure. The majority of the 37 were run by North American and Western European companies, and all included a local partner. The 37 experiences on which I base this article provide further evidence of poor joint venture performance: 7 collapsed and 5 were drastically reorganized. These ventures were either liquidated or taken over by one partner, or control passed from one partner to the other. And a Harvard Business School study reveals that 30 % of a sample of 1,100 joint ventures formed before 1967 between American companies and partners in other developed countries proved unstable because of strategic and organizational changes made by a venture’s parents.

companies such as Avis, Sterling Drug, General Mills, and TRW. Many of these were large ventures that involved prominent U.S. According to a study done by the Boston Consulting Group, more than 90 ventures in Japan collapsed between 1972 and mid-1976. Joint ventures, however, do have a high overall failure rate, and many of the failures are very costly for the partner companies. In addition, nationalistic governments such as those of India and Mexico are demanding that joint ventures replace autonomous corporate subsidiaries. But as projects get larger, technology more expensive, and the costs of failure too large to be borne alone, managers in many businesses must learn to accept and work with joint ventures. Managers often disparage joint ventures as losing propositions-too complex, too ambiguous, too inflexible. The managers of these undersea enterprises and others are discovering that they have a lot to learn about the design and management of joint ventures. company voiced strong opposition to the notion of bringing in partners, but in view of the technical, economic, and political risks involved, a joint venture partnership was the only means of continuing. Steel, INCO, Lockheed, and Kennecott the fifth was an all-French venture. Four of these were international, headed by U.S. By 1980 all of these independent efforts had coalesced into five major ventures. and foreign companies, spurred by tales of great wealth lying on the seabed, were independently looking for mine sites and evaluating techniques for raising manganese nodules to the ocean surface. In the 1960s and early 1970s, a number of U.S.

How fast should the joint venture grow? What constitutes good or bad management of it? The answers to these questions and others are critical to venture success, as is management flexibility. This author, drawing from his research with 37 joint ventures involving mostly North American and Western European companies, explores the different ways executives can tailor their management approach to the specific needs of the enterprise. With the increasing use of this form of management, business leaders must think about the more effective way of managing: shared management or dominant parent. Despite the great potential for conflict, many companies routinely-and successfully-use joint ventures.

Benefit of joint venture