Question

Amco Limited an American company is manufacturing high quality products, which is very popular in America. The companies searching for the possibilities of exporting their product to foreign countries. After a search on the internet, it arrives at the conclusion that India can be a good market for its products. But the company is unaware of the distribution system in India. Now the company is looking for such a company which is already established in India and it has a strong distribution system. Once again it searched on the Internet and found there was an Indian company named Surya Limited which is facing several financial constants, but it had a very strong distribution system. Amco Limited negotiated with Surya Limited and both the companies made an agreement to jointly run their business. In this way at the American company, with the help of Surya Limited, got a good experience of entering the foreign markets. (a)Identify the type of business enterprise formed by merging Surya Limited with Amco Limited. (b) State any five features of such a business enterprise. ​

Answer 1

Answer:

(a) Joint Venture

(b) Features:

(i) Increased resources and capacity−−−−−−−−−−−−−−−−−−−−−−−−−−: Joint venture adds to existing resources and capacity enabling the company to grow and expand more quickly and efficiently.

(ii) Access to new markets and distribution networks:−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−− When a business enters into joint venture, it can access new markets. They can also take advantage of the establishel channel, i.e, the retail outlies in different local markets.

(iii) Access to technology:−−−−−−−−−−−−−−−−− Advanced techniques of production leads to superior quality of products and reduced cost of production. If saves a lot of time, energy and investment because they do not have to develop their own technology.

( iv) Innvation⟩−−−−−−−−− Joint ventures allow business to come up with new and innnovative products for the market because of new ideas and technology of foreig partners.

Answer 2

Answer:

A– Joint Venture

Definition :-

A Joint Venture Is A Business Entity Created By Two Or More Parties , Generally Characterized By Shared Ownership , Shared Returns And Risks, And Shared Governance.

Companies Typically Pursue Joint Venture For One Of The Four Reasons:

• To Access A New Market, Particularly Emerging Markets.

• To Gain Scale Efficiencies By Combining Assets And Operations.

• To Share Risks For Major Investments And Projects.

• Or To Access Skills And Capabilities.

B– Features / Advantages :-

• Economies Of Scale

• Innovation

• Low Cost Of Production

• Brand Name

• Access To Technology

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