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AMM Journal 3 - 7 Defensive response to industry boundaries...

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Kelsey Jans Prof. Espy AMM 101 4/18/07 Retail Manufacturer Joint Ventures Journal 3 There is a growing trend in retailer- manufacturer joint ventures. Give an example. What are the advantages? What are the disadvantages? Joint venture: Entity formed between two or more parties to undertake an economic activity together. The parties agree to create a new entity by both contributing equity, they share in revenues, expenses, and control of the enterprise. Ex: Sony Ericsson joint venture Ex: A child welfare organization in the Midwest initiated a joint venture whose mission is to develop and service client tracking software for human service organizations. The 5 partners all sit on the joint venture corporations board, and together have been able to provide the community with much-needed resource. Reasons Why: 1. build company’s strengths 2. Spreading costs/risks 3. Improve financial resources 4. Access to new technologies and customers 5. Influencing structural evolution of the industry 6. pre-empting competition
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Unformatted text preview: 7. Defensive response to industry boundaries 8. speed to marked 9. improved agility 10. synergies 11. transfer of technology/skills 12. diversification Ex: cingular between SBC (now AT&T inc) and Bell South. XFL between NBC and WWE Nokia Siemens Networks- between Nokia and Siemens AG Advantages : Provide participation to income and growth. Chance for growth, penetrate new market, create new industries, skills, training, increased employment Disadvantages: Differences in culture and management style can create problems between partners over settlement of claims, valuation of assets and liabilities, adverse publicity in local and international media can damage the image and reputation of a company. In Class Notes: Advantages: 1. loyalty 2. Brand recognition 3. Discount proficiency 4. Distribution ( new kinds of customers) 5. Cuts down competition Disadvantages: 1. could have more expenses 2. can’t use other vendors 3. mergers can ruin it (risk factor)...
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