How Not To Go It Alone

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The advantages and disadvantages, and the do's and don't's of joint ventures are explained by Tom Fawcett, author of Marketing in Europe, who is now running a marketing consistency company.

Joint ventures are held in suspicion by most businessmen, but they are, in certain circumstances, an excellent way of entering a new market or expanding within a given market sector.

Suspicion arises firstly because it seems obvious that if two (or more) companies have equal interests in a joint operation, neither can exercise the control essential for efficient management Secondly, wariness is created by the knowledge that joint ventures are always difficult on account of the high degree of tact, diplomacy, give-and-take, and sensitivity to other parties' feelings demanded of the partners. Joint ventures by more than two partners are, for this reason above all, infrequent and not to be recommended. Two companies coming together for a common operation are faced with enough problems, but at least enjoy better prospects of harmony than if there are more parties involved.

If joint ventures are fraught with potential conflict between partners of the same nationality, it is manifest that the dangers of disagreement are multiplied when the arrangement is being negotiated and then conducted by companies from different countries. Cultural differences tend to become exaggerated. There are conflicts between varying standards of ethics and business practice, there are national characteristics such as pride and obstinacy to deal with, and there are even differences in sense of humour that can ruin a relationship. And this daunting list

takes for granted the basic essential of lucid communication; unless perfect linguistic understanding has been established, the union has no hope of being put together, let alone managed, effectively. This is particularly important where the initial agreement is concerned. It must be taut and unambiguous, and good lawyers on both sides are as important as negotiators, accountants and technical experts.

Despite the problems, what makes joint ventures worthwhile in the right circumstances is the profitability that can be achieved by two companies sharing complementary attributes. Joint ventures should therefore be considered alongside the more usual systems of distribution: through Affiliates or distributors, wholly-owned subsidiaries or branches, licensees, or franchises. And they need not be limited to the marketing activity; manufacturing, servicing or assembly joint ventures are practicable, even independently of a company's marketing strategy.

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