The Reasons for J.V between AMC & BAIC
The Opportunities & the Challenges & The main problems
.A .1 Introduction .
The last decade has seen an unprecedented growth not only in the practice of business processes. Practically J.V finance but also in the literature on commerce & finance. This report, however, is not merely another addition to the available literature. It has a marked distinction. It not places theory and practice in one place along with business underpinnings, but also provides an objective assessment of conformation of the practice to the theory. A good coverage of recent innovation in finance products is also a distinguishing feature of this research.
The aim of this assignment are to state point out the reasons for J.V between AMC& BAIC and assess the problems and issues encountered in this J.V using modcof’s 4Cs
.A.2.How will be answered the Q
This will be done by Examine the main factors such as: definition of J.V
But at the first will be discussed the definition which will be chosen for J.V generally, then will be explained more about the main reason for AMC& BAIC to choose J.V . Then will be cerebrated the definition of medcof’s 4Csmodel, And analyze that and which one is the most effect .In the end will be talked about the final summary for all these factors and my view.
A.3. .Definition of J.V
According to (David Needle ) the (Joint ventures )is that ( two or more firms working objectives. These can include sharing resources, establishing a joint R&D project or setting up a third company with shared ownership .A joint venture is similar to a strategic alliance ,except that in a joint venture there is usual an element of shared ownership.
A joint venture, in my opinion, is that an entity formed represent that many parties are ready together to undertake businesses activity. These parties agree to create a new entity, then sharing every thong. The Joint venture can be for two kinds of projects:
· The first: One specific project only.
· The second: The projects which are continuing business relationship.
it is in short words shared ownership .as a normal result to globalization & increased competition & the attractiveness of emerging markets & increasing cost of home operations & declining growth rates..
B.The reasons for AMC& BAIC interring JV
In fact .AMC –American Motor Corporation- was one of the smaller motor manufacturers in the U.S. The flag ship product of AMC is the Jeep. But to answered to the big question which is why the AMC chosen to J.V with BAIC – Beijing Automotive Industry company - will be explained more around main reasons.
But before .it's suitable to mentioned that .initially, the original agreement was for twenty years with option to renew if both companies and Chinese Gov adreed.
.B.1 Benefits for AMC/Chrysler
Basically, there were many reasons or number of Benefits for AMC/Chrysler .
Clearly ,the AMC/Chrysler wants to reduce the risks on one hand. on the other hand, to shared the responsibility with BAIC, Therefore ,AMC made a lot money from J.V sales spec BJC jeep sales and selling jeep parts to BJC. also there're other kinds such as kit versions of the jeep. Americans allowed to increase profits through allowed to increase their if BJC was profitable. but the big gain for AMC was entry to biggest markets around the world (Chinese markets).otherwise The J.V was the only way to entry to Chinese markets according to Chinese Law .therefore the AMC sent to J.V limited technology to keep _in the same time _ the competition by producing an older jeep model .as well as the Chinese markets considered emerging markets. Therefore, BJC offered no real competition to AMC in this caution in the export markets .in deed ,AMC learnt more and more about the Chinese markets and J.V.
All these reasons make this J.V gain global reputation .
B.2 Benefits for BAIC
Initially ,BAIC get a lot of benefits ,for Example this company get western technology ,because BAIC set up R&D centre with help AMC ,that is mean that BAIC get provisional factor and significant movement to get good consequences and brilliant results . as a result BAIC gain managing knowledge and management practices .after that this J.V exporting the jeep to other emerging economies .in the main time ,BAIC gain development of the local suppliers & distributors chains .
Generally, the Chinese industry gets huge benefits .Learning about businesses theory spec (western knowledge in businesses method .then can be easy to create jobs for new generations.
.C.Analyzed the J.V problems between AMC& BAIC using medcof’s 4Csmodel
It is clear that JV faced many problems such as Bureaucracy, Accounting systems, Localization , after-sales, personnel issues , sale & profits.
Basically. will be analyzed all these problems in specific way , which called ( medcof’s 4Csmodel) .
.C.1 Medcof’s 4Csmodel description
When said (Medcof’s 4Cs),will talked in detail about four main factors which created by Medcof, that include :(capability ,compatibility, commitment, control) .
..1 Capability
Capability means that two main elements
first, what each partner brings to the J.V
Second , what they expect from each other ,that is what missed here.
I mean that if one of these elements did not undertake that means will be faced many problems, however that is what happened in this case .Therefore most of these problems come from incapacity such as Accounting systems, Localization .But the most important relative to capability is The local suppliers could not produce on suitable time.
Also, technologically, the services and spare parts industries in China were underdeveloped. Therefore this J.V couldn't compete other companies .
Anther example relative to capability is that AMC find that there're no essential in Chinese system such as cash-flow statements or cost accounting information.
Compatibility
The J.Vs are successful business idea, if they can solve the cultural ,management, personality and administrative problems. Problems arise when they do not have compatibility .in the other words , if they‘re working and do not emerge until they will be faced what can be called (differences).Differences between U.S & Chinese accounting systems , Differences in wages e.g. large pay of Americans compared to local managers made locals unhappy, differences in political nature of doing business such as the cumbersome bureaucracy .
Commitment
The commitment means that a legal obligation to undertake an activity in a given way at a given time in the future.
In the other words it is the extent in which the partners are willing to invest resources and effort on a continuing basis.the clear example in area is that a state bureaucracy AMC /Chrysler soon realized the Chinese government was in control of every thing BJC did, despite BJC being an autonomous company, this is kind of centrally planned economy .The relative example to this area is that the delays from Chinese company, If any company in J.V world delayed for any reason, they will be put in huge trouble. Another relevant example is that the local suppliers could not produce on suitable time .
Control
This J.V continued manufacturing the BJ2020.latly focused on the Jeep, but with decrease control of supply chain. Another Example in this area is that AMC realized the Chinese government was in control of every thing BJC did, because Chinese government saw BJC as away of controlling the flow of foreign exchange, not as a potentially successful company.
Conclusion
last ,but not least, there are kind of business benefits from J.V. Therefore will be heard a lot of J.V in next days with more of professionalization .homogenization, mergers, and conglomerates .
The results can be summarized in key points:
-In an analytical view , a joint venture, in my opinion, is that an entity formed represent that many parties are ready together to undertake businesses activity
There are two kinks of J.V: -
· The first: One specific project only
· The second: The projects which are continuing business relationship
-The many reasons for interring JV , such as J.V between AMC& BAIC .this
J.V get more and more benefits to some extant.
- the J.V problems Analyzed between AMC& BAIC using medcof’s 4Cs model
(capability ,compatibility, commitment, control).
Finally ,the J.V is very important in competitive world .it is –in my opinion-the first step to positive perception to business activities which need –to some extant-kind of finical flexible
Acknowledgement
The last word is that I would like to say that (thank you ) is not enough to my teacher Gusipe, who asked me to produce a report ,who taught me ( joint venture) as a key concept in finical industry. who persistently persuaded me to carry on the work.
Especial thanks for his Expert advise .
References
Books :
1.Business in context by David Needle
2.summury in J.V by my teacher Gusipe
Webs :
1. http://books.google.ru/books?id=BArgnlksUc4C&pg=PA471&hl=ar&source=gbs_selected_pages&cad=3
2http://financial-dictionary.thefreedictionary.com
3http://en.wikipedia.org/wiki/Joint_venture
The last decade has seen an unprecedented growth not only in the practice of business processes. Practically J.V finance but also in the literature on commerce & finance. This report, however, is not merely another addition to the available literature. It has a marked distinction. It not places theory and practice in one place along with business underpinnings, but also provides an objective assessment of conformation of the practice to the theory. A good coverage of recent innovation in finance products is also a distinguishing feature of this research.
The aim of this assignment are to state point out the reasons for J.V between AMC& BAIC and assess the problems and issues encountered in this J.V using modcof’s 4Cs
.A.2.How will be answered the Q
This will be done by Examine the main factors such as: definition of J.V
But at the first will be discussed the definition which will be chosen for J.V generally, then will be explained more about the main reason for AMC& BAIC to choose J.V . Then will be cerebrated the definition of medcof’s 4Csmodel, And analyze that and which one is the most effect .In the end will be talked about the final summary for all these factors and my view.
A.3. .Definition of J.V
According to (David Needle ) the (Joint ventures )is that ( two or more firms working objectives. These can include sharing resources, establishing a joint R&D project or setting up a third company with shared ownership .A joint venture is similar to a strategic alliance ,except that in a joint venture there is usual an element of shared ownership.
A joint venture, in my opinion, is that an entity formed represent that many parties are ready together to undertake businesses activity. These parties agree to create a new entity, then sharing every thong. The Joint venture can be for two kinds of projects:
· The first: One specific project only.
· The second: The projects which are continuing business relationship.
it is in short words shared ownership .as a normal result to globalization & increased competition & the attractiveness of emerging markets & increasing cost of home operations & declining growth rates..
B.The reasons for AMC& BAIC interring JV
In fact .AMC –American Motor Corporation- was one of the smaller motor manufacturers in the U.S. The flag ship product of AMC is the Jeep. But to answered to the big question which is why the AMC chosen to J.V with BAIC – Beijing Automotive Industry company - will be explained more around main reasons.
But before .it's suitable to mentioned that .initially, the original agreement was for twenty years with option to renew if both companies and Chinese Gov adreed.
.B.1 Benefits for AMC/Chrysler
Basically, there were many reasons or number of Benefits for AMC/Chrysler .
Clearly ,the AMC/Chrysler wants to reduce the risks on one hand. on the other hand, to shared the responsibility with BAIC, Therefore ,AMC made a lot money from J.V sales spec BJC jeep sales and selling jeep parts to BJC. also there're other kinds such as kit versions of the jeep. Americans allowed to increase profits through allowed to increase their if BJC was profitable. but the big gain for AMC was entry to biggest markets around the world (Chinese markets).otherwise The J.V was the only way to entry to Chinese markets according to Chinese Law .therefore the AMC sent to J.V limited technology to keep _in the same time _ the competition by producing an older jeep model .as well as the Chinese markets considered emerging markets. Therefore, BJC offered no real competition to AMC in this caution in the export markets .in deed ,AMC learnt more and more about the Chinese markets and J.V.
All these reasons make this J.V gain global reputation .
B.2 Benefits for BAIC
Initially ,BAIC get a lot of benefits ,for Example this company get western technology ,because BAIC set up R&D centre with help AMC ,that is mean that BAIC get provisional factor and significant movement to get good consequences and brilliant results . as a result BAIC gain managing knowledge and management practices .after that this J.V exporting the jeep to other emerging economies .in the main time ,BAIC gain development of the local suppliers & distributors chains .
Generally, the Chinese industry gets huge benefits .Learning about businesses theory spec (western knowledge in businesses method .then can be easy to create jobs for new generations.
.C.Analyzed the J.V problems between AMC& BAIC using medcof’s 4Csmodel
It is clear that JV faced many problems such as Bureaucracy, Accounting systems, Localization , after-sales, personnel issues , sale & profits.
Basically. will be analyzed all these problems in specific way , which called ( medcof’s 4Csmodel) .
.C.1 Medcof’s 4Csmodel description
When said (Medcof’s 4Cs),will talked in detail about four main factors which created by Medcof, that include :(capability ,compatibility, commitment, control) .
..1 Capability
Capability means that two main elements
first, what each partner brings to the J.V
Second , what they expect from each other ,that is what missed here.
I mean that if one of these elements did not undertake that means will be faced many problems, however that is what happened in this case .Therefore most of these problems come from incapacity such as Accounting systems, Localization .But the most important relative to capability is The local suppliers could not produce on suitable time.
Also, technologically, the services and spare parts industries in China were underdeveloped. Therefore this J.V couldn't compete other companies .
Anther example relative to capability is that AMC find that there're no essential in Chinese system such as cash-flow statements or cost accounting information.
Compatibility
The J.Vs are successful business idea, if they can solve the cultural ,management, personality and administrative problems. Problems arise when they do not have compatibility .in the other words , if they‘re working and do not emerge until they will be faced what can be called (differences).Differences between U.S & Chinese accounting systems , Differences in wages e.g. large pay of Americans compared to local managers made locals unhappy, differences in political nature of doing business such as the cumbersome bureaucracy .
Commitment
The commitment means that a legal obligation to undertake an activity in a given way at a given time in the future.
In the other words it is the extent in which the partners are willing to invest resources and effort on a continuing basis.the clear example in area is that a state bureaucracy AMC /Chrysler soon realized the Chinese government was in control of every thing BJC did, despite BJC being an autonomous company, this is kind of centrally planned economy .The relative example to this area is that the delays from Chinese company, If any company in J.V world delayed for any reason, they will be put in huge trouble. Another relevant example is that the local suppliers could not produce on suitable time .
Control
This J.V continued manufacturing the BJ2020.latly focused on the Jeep, but with decrease control of supply chain. Another Example in this area is that AMC realized the Chinese government was in control of every thing BJC did, because Chinese government saw BJC as away of controlling the flow of foreign exchange, not as a potentially successful company.
Conclusion
last ,but not least, there are kind of business benefits from J.V. Therefore will be heard a lot of J.V in next days with more of professionalization .homogenization, mergers, and conglomerates .
The results can be summarized in key points:
-In an analytical view , a joint venture, in my opinion, is that an entity formed represent that many parties are ready together to undertake businesses activity
There are two kinks of J.V: -
· The first: One specific project only
· The second: The projects which are continuing business relationship
-The many reasons for interring JV , such as J.V between AMC& BAIC .this
J.V get more and more benefits to some extant.
- the J.V problems Analyzed between AMC& BAIC using medcof’s 4Cs model
(capability ,compatibility, commitment, control).
Finally ,the J.V is very important in competitive world .it is –in my opinion-the first step to positive perception to business activities which need –to some extant-kind of finical flexible
Acknowledgement
The last word is that I would like to say that (thank you ) is not enough to my teacher Gusipe, who asked me to produce a report ,who taught me ( joint venture) as a key concept in finical industry. who persistently persuaded me to carry on the work.
Especial thanks for his Expert advise .
References
Books :
1.Business in context by David Needle
2.summury in J.V by my teacher Gusipe
Webs :
1. http://books.google.ru/books?id=BArgnlksUc4C&pg=PA471&hl=ar&source=gbs_selected_pages&cad=3
2http://financial-dictionary.thefreedictionary.com
3http://en.wikipedia.org/wiki/Joint_venture
