In terms of competition policy, the problem is to weigh the potential reduction in competition against the potential benefits of pooling risks, sharing capital costs and diffusing knowledge. Joint ventures are now becoming more prevalent in the development of new technologies. Thus, joint ventures are common in resource extraction industries where capital costs are high and where the possibility of failure is also high. Joint ventures are usually justified on the grounds that the specific project is risky and requires large amounts of capital. Joint ventures can become an issue for competition policy when they are established by competing firms. It is similar to a partnership, but limited to a specific project (such as producing a specific product or doing research in a specific area). © European Commissionįor more information : Article 3(4) of the Merger Regulation.Ī joint venture is an association of firms or individuals formed to undertake a specific business project. Full-function joint ventures which act on the market independently from their mother companies are treated as concentrations under the Merger Regulation. In practice joint ventures encompass a broad range of operations, from merger-like operations to cooperation for particular functions such as R&D, production or distribution. Under the EU competition rules, joint ventures are undertakings which are jointly controlled by two or more other undertakings. maximise the returns.Association of firms or individuals formed to undertake a specific business project.How can you monitor performance and continue effective and honest communication with your partner? What will make or break the venture? Consider how you’ll operate in a different culture Step 3: Manage the overseas joint ventureĬonsider these points in the ongoing management of the joint venture: Take independent, specialist legal advice to ensure that the agreement covers all critical issues You should discuss and draft an outline agreement or blueprint. Establish what funding and support you can access. finalise the structure of the venture.Your proposed partner should have the right capabilities, the same agenda and inspire trust and confidence. Step 2: Establish the overseas joint ventureĬonsider these points carefully when establishing the overseas joint venture: Define what its mission, objectives and scope will be a business plan for the joint venture.A final decision needs thorough research and appraisal Analyse if it makes commercial sense, and if it is practical and affordable the business case for the joint venture.Step 1: Identify the investment opportunityĬonsider these points to help identify the investment opportunity: To create a joint venture in an overseas market you’ll need to think about the following steps. establish an exit strategy and insert necessary clauses into contracts.know about sources of support, funding, and grants.know the law and jurisdiction for any disputes.establish timelines and cash flow projections.ensure sources of supply and be clear on cost prices.be clear on roles and responsibilities within the business.establish clear lines of communication and reporting requirements.think about the board structure and decision making powers.
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