Discuss four reasons for the increase in International Joint Venture Essay

Discuss four reasons for the increase in International Joint Venture arrangements and support your analysis with specific examples from any business sector - Essay Example ventures are often formed between two entities to achieve certain economic objective and after achievement of such objectives they are often liquidated. Joint ventures are common in different industries and are formed for different purposes as all the parties to the Joint venture contribute one way or another for the purpose of achieving the objective. Joint ventures are therefore important in the sense that their formation allows companies to utilize each other’s strengths in achieving the desired strategic objectives. There are various benefits that organizations can derive from join ventures including sharing of technology and R&D facilities, developing new markets and sharing of risks spread over different markets as well as the expansion into new markets. However, despite the fact that international joint ventures offer such benefits but their failure ratio is significantly larger because most major international joint ventures failed to perform. This paper will discuss different reasons as to why international joint ventures are formed and potential benefits they provide to respective organizations by citing example from different business sectors where International joint ventures have actually been formed. â€Å"In general, a joint venture (â€Å"JV†) is an association of two or more entities (whether corporate, government, individual or otherwise) combining property and expertise to carry out a single business enterprise and having a joint proprietary interest, a joint right to control and a sharing of profits and losses.  Ã¢â‚¬Å"(Vaughan, 2009). The above definition indicates that a joint venture can be formed between different entities regardless of their legal status by taking benefit from each other’s expertise and property to perform a single business objective. However, all the entities in the joint venture also settle for gaining joint right to control the venture as well as share profits and losses arising out of taking that business activity. It

Business Article from NY times, Economist, Bloomberg

Business from NY times, Economist, Bloomberg - Article Example The poor performance of the stock market has reduced the returns of investors on their savings and the declining interest rates mean that a large pension pot would be required to generate a certain retirement income. The cost of providing pensions to employees has increased thus the shift to defined contribution plans. According to the article, most employees have a problem with deferred gratifications and only few have the self-control to delay their pensions. Employees have to wait for long period up to 40 years for the pension to pay-off, but the pension pot may not be worth their contributions (Buttonwood 73). According to the author, British Institute and Faculty of Actuaries has examined whether there are possibilities of offering guaranteed pensions in the Defined Contributions market. The article offers a simple method of offering (virtually) guaranteed pension if investors buy the index-linked government bonds since savings are protected against any inflation and government cannot default (Buttonwood 73). However, the returns are low, and thus why most government pension and corporate funds have invested heavily in equities hoping excess returns in equity market will make them make lower contributions. Accordingly, one can hedge against the equity risk by buying derivatives such as a put option that guarantees the derivative holder the option of selling the shares at a set price but over the long term put options will be more expensive that short-term contracts (Buttonwood 73). Other approached of offering the guaranteed pensions in DC market include using complex hedging strategies that rebalance the portfolio to eliminate any substantial losses. This involves using the high returns of equities in a low-risk manner thus reducing the costs of purchasing a guarantee (Buttonwood 73). However, the actuaries have failed in calculating the costs of guarantee, and protection against inflation. From this perspective, pensions are long term