JOINT-VENTURE

Sandra Chicas
Magister in international Commerce
PHD © in Education
WHAT IS A J0INT-VENTURE?

 Association between many actors who have the same objective.

 Strategy.
 Free access.
Risks

 Respond at the demand

 Lose the decisional power
 Different corporate culture
 A Great Joint-Venture

 Share all our clients

 Transparence, easy communication
 The percentage must be clear when they’re having
a sale
Advantages and disadvantages

ADVANTAGES DISADVANTAGES
-access to new markets and -can become bureaucratic:
distribution networks decision process can be slower
-increase of the capacity -synergies are not automatic
-sharing of risks and costs
between the co-venturers
-access to greater ressources
Difference Joint-Venture/Partnership

JOINT-VENTURE PARTNERSHIP
Contractual arrangement Agreement to share profits and losses
Determined period Undetermined period
Specific goals Only to do business
“Co-venturers” “Partners”
Examples of Colombian Joint-Ventures

Joint-venture agreement
between Tayrona Steel Pipe
and Perma-Pipe in 2014.
Goal: to establish pre-insulated pipe in
Latin America
Perma-Pipe: way to diversify its geographical
Joint-venture agreement
portfolio between Postobon and
CCU in 2014
Goal: to develop and energize the
beer category with the creation of a
Joint-venture agreement new compagnie Central Cervecera
de Colombia.
between Expreso Brasilia
and Cruz del Sur in 2014
Goal: to offer a unique ticket to
mobilize clients to destinations in South
America.
 Mergers and Acquisitions: Definition

Both Mergers and Acquisitions are prominent aspects of corporate

strategy, Corporate, finance and management. The process of M&A deals on
the ways of buying, selling, dividing and combining of different companies.
1. Merge

The process of merger involves combining of two companies as a single

company. In merger, both the companies mutually agree to merge themselves.

There are two important concepts in merger:

a. Acquiring company: It is a single existing company which purchases the majority of

equity shares of another company

b.Acquired company: It surrenders its majority of equity shares to the acquiring company.
 Mergers and Acquisitions: Definition

2. Adquisition

In the process of acquisition, one company buys majority of the company ownership
stakes of the target company in order to obtain control over the same.

Acquisitions can be both, friendly or hostile. In Friendly acquisitions, the target

firm offers its agreement to get acquired. Whereas in hostile acquisitions the
target firm does not give any agreement, thus the acquiring firm purchases a
large stakes of the target company in order to have a majority stake in it.
Advantages

• The most common reason for firms to enter into merger and acquisition is to merge their
power and control over the markets.

• Another advantage is Synergy that is the magic power that allow for increased value
efficiencies of the new entity and it takes the shape of returns enrichment and cost savings.

• Economies of scale is formed by sharing the resources and services (Richard et al, 2007).
Union of 2 firm's leads in overall cost reduction giving a competitive advantage, that is
feasible as a result of raised buying power and longer production runs.

• Decrease of risk using innovative techniques of managing financial risk.

• To become competitive, firms have to be compelled to be peak of technological

developments and their dealing applications. By M&A of a small business with unique
technologies, a large company will retain or grow a competitive edge.

• The biggest advantage is tax benefits. Financial advantages might instigate mergers and
corporations will fully build use of tax- shields, increase monetary leverage and utilize
alternative tax benefits (Hayn, 1989).
Disadvantages
• Loss of experienced workers aside from workers in leadership positions. This kind of loss
inevitably involves loss of business understand and on the other hand that will be worrying to
exchange or will exclusively get replaced at nice value.

• As a result of M&A, employees of the small merging firm may require exhaustive re-skilling.

• Company will face major difficulties thanks to frictions and internal competition that may
occur among the staff of the united companies. There is conjointly risk of getting surplus
employees in some departments.

• Merging two firms that are doing similar activities may mean duplication and over capability
within the company that may need retrenchments.

• Increase in costs might result if the right management of modification and also the
implementation of the merger and acquisition dealing are delayed.

• The uncertainty with respect to the approval of the merger by proper assurances.

• In many events, the return of the share of the company that caused buyouts of other
company was less than the return of the sector as a whole.
 Franchises
 It is a business link between two parts in which one of
them pays a certain amount of money (Royalty) for the
use of the Brand.
 Types of Franchises
 Commercial Franchise:
Franchisor gives the necessary elements to allow the sale of the
product.
Examples:Cell phone franchaises and travel agencies.

 Industrial Franchise:
The franchisor gives the permission to manunfacture , the
thechnology, the Brand , the administratives process.
Examples: food franchises
 Types of Franchises
 Product Distribution Franchise:
This franchise concept is similar to a supplier – distributor relationship
Examples: franchises of clothes or furniture

 Franchise of service
This franchise has as object give a service to the client by means of a
specialized business.
Examples: Franchise of school of languages, franchise dedicated to the
maintenance of cars or franchises that offer the service of translations.
 Elements of Franchises
1. FRANCHISOR: Is the legal entity that cedes a trademark already
accredited.
✓ work technique
✓ experience
✓ Knowledge

2. FRANCHISEE: natural or legal person who starts the commercial activity

associating with the franchised brand.
✓ exclusivity zone
✓ training
✓ permanent assistance during the term of the contract
 Most important Franchises

Subway: 7-Eleven: Windham Hotel Group:

-It’s located in the fast- -Is part of the "24 hours" -Hotel franchise
food sector store sector -7,300 hotels
- 46,000 stores in 16
-37.100 franchises
different countries Hertz:
-It’s a company dedicated to the
Mc Donald’s: KFC: rental of automobiles
- Fast food sector - Fast food sector - 8,500 establishments
-16,850 restaurants
- Account 36,000
franchises around the Marriott International:
around the world - Hotel franchise
world.
- 5.975 worldwide
Pizza Hut:
Burger king: -Its sector is that of fast Hilton Hotels & Resorts:
food mainly for the sale - Hotel chain
- Fast food sector
of pizzas - 500 franchises
- 12,300 stores -13,430 restaurants
worldwide