Imposed by the target market for foreign businesses. The best mode of entry that can be applied by the company is through joint venture strategy. Joint venture is a tool in a development of a business between two or more organizations acting together, structured to a corporation, partnership for a specific business activity (Egan, 2010). Among the advantages of Joint venture between Vaughan and Lad is it will give a potential boost to the automotive industry In Russia. An example Is when the Joint venture between Ford and Seller where It was approved of a credit line amounted
SSL . 4 billion by EVE bank on the production of Ford cars in Russia (ART, 201 1). Both organizations also will able to access to better resources, technologies and finance (IN Business Info, 2013). Vassal’s adopted the coffee approach, a range of CEO- friendly cars that have low CO, emission reduction as well as fuel efficiency (Vaughan, 2013). This technology adopted by Vaughan can be shared with Lad in which can be used to build a new model. Vaughan also is able to access to the Russian market (Threatens, n. D. Apart of bulling a new model of car, Vaughan Is able o sell Its cars to Lad’s existing customers In the market. Furthermore, both companies are able to share their existing staff in which will benefit from complementary, specialized staff (Threatens, n. D. ). Joint ventures also has its challenges during its operation. Issues on partner’s contributions can be a challenge (KEMP, 2009). Information exchange between Vaughan and Lad could be crucial if Lad did not give out the exact Information regarding on the flannels and costs.
Furthermore, the culture as well as management styles might resulted In a poor integration and corporation between these two joint companies (RPR Emery and Associates, 2012). This is important for Vaughan as the company is cooperating with a Russian car company where the management team and subordinates sent by the company to Russia may be facing cultural shock in their new workplace. This may affect the style of working as well as management styles as the workers from both companies need to work together. In a Joint venture, sometimes It Is not evenly a balance Joint venture.
One company may have enough expertise In any area, while he other company did not have enough expertise in the area (Machete, 2009). The workload cannot be evenly distributed between Vaughan and Lad as both companies has different levels of expertise. More time will be taken as actions need to be made to make sure both sides are at the same level and this may costs a lot. A way to avoid problems in Joint venture between these two companies Is at the must be stated clear as well as all the regulations. This way, both companies are aware of all the core information needed and actions can be made as soon as possible.