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The following passage is for questions number 53-56!
Joint ventures are a form of cooperative strategy where firms create an alliance in order to combine their resources and capabilities. The objective is to establish a stronger competitive position. Firms can diminish the negative effects of competitive rivals by building higher barriers to entry through amalgamating financial resources, research and development, production, and distribution channels. Joint Ventures increase the profitability of an industry by reducing competition in markets where both firms are present.
The most common entry strategy for global firms to enter international markets is through joint ventures with local firms, followed by acquisitions. The supermarket chain Groupe Auchan created the joint venture Sun Art Retail Group with Taiwan conglomerate Ruentex to establish China's largest hypermarket chain. Global rivals Carrefour and Wai-Mart Stores, United Kingdom's Tesco, and Germany's Metro had to slow down plans in the country in view of the strength of the venture. Auchan recently restructured its stake in the joint venture with Ruentex, leading to the acquisition of a majority stake in Sun Art Retail Group.
Other examples of this cooperative strategy include Microsoft and General Electric's Caradim, aimed at helping health industry use online medical records to improve health services. Google and Motorola joined forces to satisfy Google's strategy to acquire patents and Motorola'sefforts to compete with Apple's iPhone. Volkswagen Group and GM Motors have set up joint ventures with corporations in China, Mexico, Taiwan, Turkey, and India, among others. The objective was to establish manufacturing presence and distribution chains in the respective countries.
Adapted from: Channon & Sammut-Bonnici. (2014). Joint Ventures. Wiley Encyclopedia of management: John Wiley & Sons, Ltd.
The text states all the following, excepts ....
Joint ventures are a form of cooperative strategy.
Joint ventures are created to establish a stronger competitive position.
Joint ventures are created to enter international markets.
Joint ventures are created with local firms from target market.
Joint ventures are created to establish manufacturing presence and distribution chains in the respective countries.
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