China Wto Case Study
Video Case 2
Are Chinese Business Partnerships
A Good Deal For U.S. Companies?
Case Assignment Questions:
1. Compare and contrast joint ventures and wholly owned subsidiaries. What are the advantages and disadvantages of each form of market entry? Why might a company choose one over the other? A joint venture is a partnership between two or more people or businesses/companies who will share all expense, profit, loss expertise and control in a specific project. A wholly owned subsidiary is a company that has all of its common stock owned by a parent company. Both joint ventures and wholly owned subsidiaries are both ventures that other businesses/companies have a controlling stake in. These types of market entry are both quite different. The ownership of a joint venture is shared by two or more companies, while wholly owned subsidiaries ownership is maintained by one parent company. Joint ventures are less risky and the risk is equally shared, while wholly owned subsidiaries are riskier and all losses are on the parent company. The advantages of a wholly owned subsidiary are the parent company has full control over the subsidiary company’s operations and can also meet the financial and other needs of the subsidiary company. The parent company also all the benefits instead of sharing any profits. The disadvantages of this type of entry are they are riskier, entry into a foreign market can be more difficult, and all the losses are on the parent company. Joint ventures are faster and less costly, while the resident partner can give them the inside advantage depending on the resident partners relationship with the local suppliers and customers. The resident partner is also proficient in the local language therefore taking away the language barrier. The loss is also shared between the partnering companies versus having all the loss on oneself. The disadvantages of a joint venture is the creation of a potential competitor in the partner,
Are Chinese Business Partnerships
A Good Deal For U.S. Companies?
Case Assignment Questions:
1. Compare and contrast joint ventures and wholly owned subsidiaries. What are the advantages and disadvantages of each form of market entry? Why might a company choose one over the other? A joint venture is a partnership between two or more people or businesses/companies who will share all expense, profit, loss expertise and control in a specific project. A wholly owned subsidiary is a company that has all of its common stock owned by a parent company. Both joint ventures and wholly owned subsidiaries are both ventures that other businesses/companies have a controlling stake in. These types of market entry are both quite different. The ownership of a joint venture is shared by two or more companies, while wholly owned subsidiaries ownership is maintained by one parent company. Joint ventures are less risky and the risk is equally shared, while wholly owned subsidiaries are riskier and all losses are on the parent company. The advantages of a wholly owned subsidiary are the parent company has full control over the subsidiary company’s operations and can also meet the financial and other needs of the subsidiary company. The parent company also all the benefits instead of sharing any profits. The disadvantages of this type of entry are they are riskier, entry into a foreign market can be more difficult, and all the losses are on the parent company. Joint ventures are faster and less costly, while the resident partner can give them the inside advantage depending on the resident partners relationship with the local suppliers and customers. The resident partner is also proficient in the local language therefore taking away the language barrier. The loss is also shared between the partnering companies versus having all the loss on oneself. The disadvantages of a joint venture is the creation of a potential competitor in the partner,