Difference Between Joint Venture And Acquisition

employees, with their own routines and culture. Integrating such employees is difficult, particularly so if there are cultural differences between the two firms (Hennart S. , 1997)Another criterion is the cultural differences. It is hard to manage people from different areas and cultures. To avoid such problems, firm’s choices joint ventures over acquisitions. The management of the joint venture’s labor force can, therefore, be left to the local partner (Hennart S. , 1997).Hence joint ventures may be preferred over acquisitions by firms which are inexperienced in managing a foreign labor force, and by firms venturing outside their core industry. (Hennart S. , 1997).Managing a foreign labor force is a significant factor for the acquirer. If

However, taking risks can also be a success for the firms but also a big failure and even to crush the economy of the country in some industries such as pharmaceutical and petrol. Before entering into a country, firms must do a research and test the economic environment of the country and then choose the entry mode, joint venture or acquisition. Joint ventures are chosen, when there are many cultural differences and undesired asset of the firm is hard to split. The acquisition should be chosen by the firms that have enough experience in foreign markets and think that they can accomplish the aim of foreign

Even they are complicated than most of the entry modes for sure, they are going to bring extraordinary value to the partners. Achievement in joint ventures is going to bring perfect value and makes a firm global. But of course, it is not easy to get what it is wanted, if there are not enough resources required such as, human resources, raw materials, so on so forth. The exact potential of the desired market must be investigated by both domestic and foreign market before creating a joint venture. It must be looked from the perspective of the institution, resources and industry based. If just one point is not enough, in short time, there might be a success but in long-term, there is going to be chaos because, as explained, an exit from the venture is hard and exiting from the venture is going to be excessive cost-oriented occurred by the exit. Because both partners are not ready for a partner to exit the venture, even, a partner that desired to exit is going to have chaotic consequences. In some industries, such as petrol and mining, the whole economy of the country is going to be influenced by the venture. This is why, deeply, I investigated joint ventures and explained its advantages and disadvantages. Because joint ventures cannot accept failure and must be treated