Strategy formulation and implementation
For this assignment now I have to create a response to colleague post about the same topic
Joint Venture is a common strategy amongst MNC’s due to the riskiness that is involved in entering an international market. Most of these risks involve cultural, political, economic, currency and management risk. As we have seen in class so far, each country operates within its own structure. Much of this structure is influenced by the political system in place. An American MNC is familiar with the structure in the USA, but other parts of the world vary greatly.
Additionally, gaining market share from an unfamiliar population base is tough, as preferences and tastes vary from country to country. A joint venture allows a foreign MNC to gain political, cultural, economic & management know-how, in partnership with an established company in the host country.
The downside of a joint venture would be giving up total control of the operations of the MNC abroad as profits, governance, expenses and returns need to be shared.
