Joint Ventures & Licensing | Business Studies for GCSE/IGCSE - Year 11 PDF Download

Overcoming Problems of Entering Foreign Markets

• Businesses often utilize two prevalent strategies to address the challenges of entering new markets: global mergers and joint ventures.
  • A global merger involves two businesses from different countries coming together under an agreement.
  • Joint ventures entail two businesses pooling their knowledge, resources, and expertise to establish a distinct business entity.
    • For instance, the mobile network EE resulted from a joint venture between the French mobile network Orange and the German mobile network T-Mobile.
• These strategies may offer a more cost-effective approach compared to other methods such as exporting, licensing, or franchising.

Reasons for Mergers or Joint Ventures

• Risk Diversification:
  • Operating across multiple markets reduces dependence on any single geographic market.
• Market Entry:
  • Utilizing mergers or joint ventures expedites market entry compared to organic growth.
  • In emerging economies, governments often mandate foreign businesses to operate via joint ventures, benefiting domestic firms.
  • Collaborating with local companies through joint ventures facilitates access to local market knowledge and business operations.
• Acquisition of Intellectual Property:
  • Patents grant legal rights to individuals or businesses for making, using, or selling an invention, while excluding others.
  • Developing intellectual property is typically a time-consuming and costly endeavor.
  • Mergers or acquisitions provide avenues for accessing intellectual property or businesses with strong reputations.
• Supply Chain Security:
  • Joint ventures with suppliers enhance the availability of scarce resources crucial for manufacturing processes.

Evaluating Global Mergers & Joint Ventures