International Business Transactions Free Essay Example, 4500 words

For example, Apple Inc has formulated joint ventures with the Chinese firms to manufacture their products mainly due to the fact that Chinese manufacturers offer cheap alternatives to produce the same quality at effectively lower costs. This therefore serves as an added advantage and attraction for the international firms to seek entry into such markets where the overall chances of reducing the costs are higher so that the final end products can be sold at the premium pricing in the international market. (Luo & Park, 2004)2 Mainly there are three types of joint ventures i. e. Contractual, corporate and partnership joint ventures. Each type of JV arrangement outlines the rights and obligations of each party to the contract and how they are actually drafted through an agreement. In a contractual joint ventures, the rights and obligations of each of the party are documented in a written agreement however, in corporate joint venture agreements, though the same procedure is adapted, however, it is more extensive. The overall extent of documentation in the corporate joint venture is more extensive and contains diversified range of issues covered in the agreement. There are two important elements which need to be discussed and explored in order to fully understand joint ventures and their overall legal essence. We will write a custom essay sample on International Business Transactions or any topic specifically for you Only $17.96 $11.86/pageorder now In business terminology, joint ventures are simply the strategic arrangements between two or more parties to accomplish any task of common interest. International firms have repeatedly used this method in order to make some important strategic decisions to expand into international markets. 3(Hewitt, 2005). There are different methods or ways through which international firms can actually make an entry into the new market. For example, firms can enter into the new market through making exporting arrangements or they can even inter into the new market as a wholly owned businesses to start a Greenfield project. However, joint venture is considered as the most common method used by the firms to make an entry into the international market. (Shane, 2001)4 There are generally no specific meanings to the term joint venture however, loosely defining, a joint venture is considered as the undertaking or agreement between two or more parties to undertake a common activity of mutual interest. What is significantly more critical is the fact that the control of the entity which is formulated after the formation of the joint venture is mutually shared by each of the party to the contract.