![]() ![]() Using real-world examples, the authors offer their suggestions for meeting these challenges. Negotiators of a potential venture need to be sensitive to the non-compete and opportunity doctrine issues that will arise once the. And fourth, build a cohesive, high-performing organization (the JV or alliance)-not a simple task, since most managers come from, will want to return to, and may even hold simultaneous positions in the parent companies. As in any complicated commercial arrangement, the discussion of one provision in a venture agreement, namely the scope of the venture’s business, will inevitably flow into and inform a discussion of other issues. Third, manage the economic interdependencies between the corporate parents and the JV. Second, create a shared governance system for the two parent companies. First, build and maintain strategic alignment across the separate corporate entities, each of which has its own goals, market pressures, and shareholders. Specifically, the launch team must tackle four basic challenges. This paper develops and tests hypotheses linking cultural distant to the ownership distribution of equity capital across the partners in international joint. During this period, it’s critical for the parents to convene a team dedicated to exposing inherent tensions early. The launch phase begins with the parent companies’ signing of a memorandum of understanding and continues through the first 100 days of the JV or alliance’s operation. As a result, the parent companies experience strategic conflicts, governance gridlock, and missed operational synergies. Most companies are highly disciplined about integrating the companies they target through M&A, but they rarely commit sufficient resources to launching similarly sized joint ventures or alliances. ![]() Joint ventures provide significant benefits by combining resources and experience. The authors, all McKinsey consultants, argue that JV success remains elusive for most companies because they don’t pay enough attention to launch planning and execution. A joint venture partner is a corporation that collaborates with another to accomplish common commercial goals. A joint venture is a business entity created by two or more companies entering into an agreement to combine their resources with the aim of achieving a specific business goal. The problem is, the success rate for JVs and alliances is on a par with that for mergers and acquisitions-which is to say not very good. Companies are realizing that JVs and alliances can be lucrative vehicles for developing new products, moving into new markets, and increasing revenues. More than 5,000 joint ventures, and many more contractual alliances, have been launched worldwide in the past five years.
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