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Question 1.

What are the factors that a multinational firm should consider when deciding to
use a joint venture as a market entry strategy for a developing country? What
are the potential benefits and risks in taking this course of action?

Join ventures is one of the many market entry strategy for big foreign firms to
ally with a local company that has already been established in the market. With
both sides benefitting from the alliance created, foreign companies would see
entering the market smoothly and expanding into it ideal. (49)

Benefits of joint venture
Although a potential market, developing countries are risky for multinational
companies. Thus, joint venture will minimize risks and allow a multinational firm
to rely on the local firm. Having a local company saves the effort to have to
research and analyze the market at great lengths; they are already established in
the local market and have the insight and expertise that is needed. With that,
they can guide and impart knowledge (Verbeke, 2013) to the foreign company
such as upcoming market trends and common customer preferences. Aside from
that, foreign partners will be able to save a huge sum of money as local firms
would already have all the necessities that a company would need in order to
operate. Not only does foreign companies not need to find distribution channels
as local companies have already (established) their own channels of distribution,
shipping and infrastructure are already established and foreign companies can
focus on the business aspects. With their partners being local, foreign companies
will not have to worry about building rapport with suppliers as there is already a
relationship between the companies and enjoy reasonable prices as it is well
known for locals to overcharge and extort from those who are ignorant of market
rates. Most importantly, local companies will already have their own customer
base that foreign firms can take advantage of and build their own base of loyal
customers from there.
With all the advantages that come with a joint venture, it will encourage such
foreign multinational companies to create such alliances. It will help them

behind technology. technology transfer and government intentions deters foreign companies from using joint venture as an way of entry into the market. A bigger company will have the obligation to support the local firm should expanding and resources be a limitation e. When using this particular market entry method. and a food producer from a developing country. Government may also encourage foreign investments but limit the ability to have the final say in decisions and will only allow local companies to have the majority in shares. but have its own set of risks too. With a multinational company allying with a business in a developing country that is comparatively smaller. Explain which companies would be responsible for providing the leadership and decision making for the various activities detailed. etc. local companies may have a different idea from its foreign counterpart which will result in conflicts and arguments with each interested in their own benefits. multinational companies may have newer technology and may have to share with its local partners in developing countries as it is costly and that may lead to technology issues between the two firms. it might hinder the growth of its foreign ally due to its size and ability in the market. (271) Risks of joint venture Joint ventures not only have enticing advantages. dated equipment. the possibility of losing decision making rights. instead of working together to grow and gain from the joint venture. it attracted a large influx of foreign investment and used joint venture as a way to markets in . size of warehouse. a French multinational food company. Develop an outline international marketing strategy for a joint venture between Danone. (228) Total 548 Question 2.g. In addition. conflict of agreements. burden of duty. lack of manpower.assimilate in to the new market better and expanding without worrying about cost. With that said. When China joined the World Trade Organization (WTO) as a member. quality of manufacturing plants.

This way. ally companies and a loyal customer base. extend in future With a new partner. then Danone can opt to further and extend the scope of the venture should the beginning results of the venture be a success. the relationship between both Danone and the producing company should be nurtured and have a mutual understanding of what is expected of the other party and set clear rules on how things should run. Danone is a famous French multinational food company that has expended into markets such as Russia. and should it be a success there will be plans to further manufacture and produce varieties. Should the joint venture be paired with one that is weak and not trustworthy. To have a successful venture. (123) 3. it should ally itself with a company that is equally as strong in its local market. Placing high expectations on a newly joint venture will strain ties between Danone and the local producing company and will be detrimental towards both reputation and outcome of the alliance. (107) 2. and gain reliable suppliers. Danone should not put all its eggs in one basket. Look for strong partners As Danone is a multinational company. Limit at the beginning. Danone can focus on developing a good relationship without distrust.China (Gregory. United States and many others. (92) 1. and will thus develop a positive reputation for its success in the venture with its partner. but it is not only a smart but also a safe move to put all . Both Danone and the local producing company should start small. and when trust is being established and the partnership proven that the venture is moving in the right direction as hoped. Put agreements in writing It is highly ideal for companies to come to an agreement after a period of negotiation. 2011). it is highly possible for the alliance to fail eventually. Partnering with a strong firm will not only even out what both companies can contribute to the alliance but gain equal profits. One example would be to start producing one product.

UK: Edward Elgar. Without it. (1998). P. (69) Conclusion The essay is to discuss the benefits and risks of using joint venture to enter markets in developing countries and at the same time to suggest agreeable marketing strategies for a joint venture between Danone and the local food producer. (59) References: Verbeke. (2011).com/2009/09/30/danone-wahaha-dispute-marketsbusiness-trademark. Cambridge University Press Kwok. Competitive dynamics of entrepreneurial market entry. Bennett. International business strategy. 2015]. Markman. That way. V. Glos. 2009). Shared assets such as infrastructure. For example. there is a mutual understanding of the consequences and repercussions of going back on the terms and conditions set down initially. capital and machinery will have to be discussed and written down as to how assets will have to be divided. it will ensure that should either company retract their words or act unethically.forbes. Cheltenham.agreements discussed in writing. . (120) 4.html [Accessed 1 Sep. (2013). R. London: Kogan Page. Establishing protocol for dissolving joint venture if it fails It is good for companies to draw up a plan on how to dissolve the joint venture when the time comes for both parties to go their own ways. the partnership turned sour. dissolving a joint venture will get ugly and may result in lawsuits. [online] Forbes. With Danone’s experience on foreign investment there should be no qualms on Danone finding success in the new market. expertise and technology while Wahaha produce and supply its trademark but Wahaha was found illegally selling its products using distributors not listed in their joint ventures. G. A. International marketing. technology. Available at: http://www. Danone was in charge of contributing capital. Danone Gives Up China Fight. and Phan. citing from the case of Danone vs Wahaha (Forbes. (2009).