1.

Under what circumstances are joint ventures be preferred to wholly owned subsidiaries as the
most appropriate mode for entering foreign nations?
Answer:
A firm may prefer to enter foreign nations through a Joint venture in the following situations:
a. The firm needs to share risks (for instance, important when a host country is economically
and/or politically unstable).
b. The firm needs additional resources to invest abroad.
c. The firm needs to be supplied with complementary knowledge by a partner (for instance,
when a firm does not have adequate trade experience or country-specific experience, or
when the host country is perceived to be very different to the home country). This kind of
knowledge is very difficult to obtain in the marketplace due to the associated high
transaction costs.
d. or when the company’s competitive advantage resides in managerial know-how

2. In recent years the number of cross-border mergers and acquisitions has ballooned.what are
the risks associated with popularity of this vehicle for entering foreign markets? How can these
risks be reduced?
Answer:
The risks associated with cross-border mergers and acquisitions are the following:
https://investmentbank.com/cross-border-mergers-and-acquisitions/
a. Human capital risks are much greater when mergers cross borders and employees will
naturally feel anxious and uncertain about their future greater when mergers cross
borders and employees will naturally feel anxious and uncertain about their future.
b. Tax – Every country has different tax laws. Although at first glance these may seem
tedious, getting blindsided by tax regulation can be costly. Due to the complicated nature
of international tax, we recommend using a local professional;
c. Regulatory landscape – laws, and regulations may not stay stagnant in an economy.
Investigate the most obvious ones within the targets sectors;
d. Financial information – the availability, accuracy, and reliability of the target’s financial
information can be harder to obtain than originally thought. Decisions are often made
without the full picture;
e. Political landscape – a country’s political stability can also blindside you, largely in the
form of a change in Government; and
f. Compliance – these vary country by country. In the US, they suggest we investigate the
compliance of the target’s home country with the US Foreign Corrupt Practices Act, and
similar anti-bribery, and anti-money laundering regulations.
Other ways to Reduce the risks
a. Contemplate the deal you are proposing. Ensure that the deal theory and deal objectives
drive all phases of the M&A lifecycle;
b. Make sure there are substantial benefits to the deal before you contact the other party;
c. Define the overall integration scope, approach, and plan for achieving both early, and
final stage goals;
d. Ensure the initial discussions with the target are structured, so the deal has the best
chance of meeting your key objectives;
e. Undergo strict pre-deal due diligence, and try to avoid the common due diligence pitfalls;
f. Organize an integration committee. Make sure the committee has representation from
both acquirer and target. This helps work out key work streams and geographical
limitations and possible benefits;
g. Focus efforts on effectively planning pre-close and post-close integration in detail. Make
sure the critical path is outlined;
h. Once the specific deal objectives are disused and agreed on between the buyer and
seller, ensure to adapt deal methodologies and playbook to suit; and
i. As you approach the final hour make sure you integrate your pre-deal due diligence with
your pre-close planning activities to prevent post-acquisition hiccups.
j. External challenges such as a disparity in attitudes to issues such as corporate
governance, social responsibility, ethics, litigation and intellectual property rights need to
be identified and addressed early on in the process to avoid significant problems further
down the line.
k. Leadership team need to understand how to engage, inspire and motivate the newly
integrated workforce and create an atmosphere of respect, trust and enthusiasm so that
they achieve buy-in from employees on both sides of the border.