FIN.as.1 - BARSHA SHRESTHA FIN 446 Chapter 1: Question 17:...

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BARSHA SHRESTHA FIN 446 Assignments #1 Chapter 1: Question 17: International Joint Venture. Anheuser-Busch, the producer of Budweiser and other beers, has recently expanded into Japan by engaging in joint venture with Kirin Brewery, the largest brewery in Japan. The joint venture enables Anheuser-Busch to have its beer distributed through Kirin’s distribution channels in Japan. In addition, it can utilize Kirin’s facilitates to producer beer that will be sold locally. In return, Anheuser-Busch provides information about the American beer market to Kirin. a. Explain how the joint venture can enable Anheuser-Busch to achieve its objective of maximizing shareholder wealth. Anheuser-Busch established a joint venture with Kirin Brewery to enter into Japan. Even though these joint ventures establish many advantages to the company it came with many disadvantages too. First disadvantage is risk of loose the control of its technology to its partner. The second disadvantage is it does not give a firm the tight control over subsidiaries and third disadvantages it that the shared ownership arrangement can lead to conflict and battles for control between the investing firms if their goal and objective changes or if they take different views as to what the strategy should be. It enables Anheuser-Busch to penetrate the Japanese market without requiring a susbtational investment in Japan. b. Explain how the joint venture can limit the risk of the international business.
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Joint venture can limit the risk of the international business because a firm can benefits from a local partner’s knowledge of the host country’s competitive condition culture, language, political systems and business system. The second advantage is that when new companies enter a new market the cost and risk of opening in foreign market is high but if a firm has partner in the host country they might gain by sharing these cost and risk with their partners. The last and most important advantage will limits the risk is joint
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This note was uploaded on 06/10/2010 for the course FINANCE 442 taught by Professor Knight during the Spring '10 term at National University of Singapore.

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FIN.as.1 - BARSHA SHRESTHA FIN 446 Chapter 1: Question 17:...

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