Joint ventures

Joint venture is a corporate entity or partnership created under local law and jointly owned-by the. parent and local interests- It is similar to a. partnership agreement where. each party makes some fixed capital contribution in the form of cash, equipment and technology. Each party has defined management responsibilities. Profits are distributed pursuant to agreement of both parties.

It is important to understand clearly why a company wants a joint venture. Many ventures are poorly conceived and probably should not be formed.

Even if there are sound strategic and economic reasons for the venture, a Western company may lack the necessary skills and qualities to be a good joint venture. The firm's capability and commitment to function in a cooperative mode must be realistically assessed. The first indication of whether or not a company is likely to be a successful joint venture is rts commitment to international business and to working in difficult conditions. It is important to ensure senior management support for the JV.

Before seeking and entering into a JY in a developing country, a company must recognize that developing business in the Third World is a long-term proposition and investment. Overseas travel is expensive and negotiations are slow. In most areas, establishing a personal relationship is a prerequisite to doing business. Technical skills are only part of the package - cultural sensitivity, adaptability, interpersonal and communications skills are also required.

Identifying and selecting a partnership is possibly the most consideration in establishing a JV. It may be the most difficult and time-consuming task- Partners are often chosen for short term and political reasons but when the situation changes, relationship often ends.

To be successful, a partnership must operate on the principle of exchange. There must be value in the relationship for both parties. JVs are much more likely to be successful when there exists a long-term need, commitment and compatibility between the partners. Such needs may include raw materials, distribution channels, labor, political connections and local knowledge.

The japanese worker

Is it better to stay with one firm throughout your working life or to change firms from time to time?

In Japan, there is a close relationship between the worker and his company. Employees work hard and do hours of unpaid overtime to make their firms more efficient. If necessary, they give up weekends with the family to go on business trips. They are loyal to their organizations and totally involved with them. For example, many of them live in company houses, their friends are people they work with, and in their spare time they do sports and other activities organized by their employers.

The system of lifetime employment creates a strong link between the enterprise and its workforce. It covers about 35% of the working population. Generally,

when a person joins a firm after leaving high school or university, he expects to stay with that firm until he retires. He has a secure job for life. Therefore, he will not be laid off if the company no longer needs him because there is no work. Instead, it will retrain him for another position.

The pay of a worker depends on his seniority, that is to say, on the years he has been with the firm. The longer he stays there, the higher his salary will be. When he is 30 or 40 years old, therefore, he cannot afford to change jobs. If he did move, he would also lose valuable fringe benefits. Promotion depends on seniority as well. Japanese managers are rarely very young, and chief executives are at least 60, and very often 70 years old.

The Japanese have a special way of making decisions. They call it the consensus system. This is how it works. When a firm is thinking of taking a certain action, it encourages workers at all levels to discuss the proposal and give their opinions. The purpose is to reach consensus (general agreement). As soon as everyone agrees on the right course of action, the decision is taken.

Because of this method, a group of workers, rather than one person, is responsible for company policies. One advantage of this is that decisions come from a mixture of experience from the top, the middle and the bottom of an enterprise. Another advantage is that junior staff frequently suggest ideas for change. A disadvantage, perhaps, is that decision-making can be slow.