Advantages And Disadvantages Of Setting Up A Joint Venture

General Survey

There are a lot of advantages in setting up a joint venture yet there are a lot of disadvantages present. There are a lot of factors needs to be considered before setting up a joint venture. The Financial Strength, Management Style, Market and technology are one of the major factors that are need to be taken into consideration. The two companies which are in partnership should have a lot of common features in them in order to establish a successful joint venture in a particular field. Strong leadership principles are to be inherited in a joint venture if they are looking to become a strong force in the market. The joint ventures haven’t been that effective since research indicates 40% of joint ventures have split up within few years of their inception. The reasons for their failure could be the difference in their ideologies, skills and target audience of the two companies. They do not focus on the joint venture since it is mainly prioritized by the company only if they are looking to enter into a domain in which are relatively new. The main focus still remains in their primary business in which are the sole owners of that particular business which leads to the slow progression of the joint ventures. The Daimler-Chrysler merger is one of the biggest flop as a joint venture. Daimler paid an astonishing $38 billion for Chrysler in 1998 whereas Cerberus Capital bought Chrysler for a meagre $7.4 billion in 2007. The Cerberus Capital management acquired an