The Preparatory Steps For a Joint Venture

Are you planning to venture into a foreign country but are short of adequate funds?

One of the tried and tested ways of venturing into new, unfamiliar markets is through joint venture (JV) with a local business partner. Having marketable products, technical know-how and the finance are not enough for getting a toehold in a new market. The knowledge about the characteristics of the particular markets and contacts and networking with local dealers and retailers are equally essential in making your presence felt.

A joint venture with a local business partner gives you the added edge of penetrating new markets. The partner is likely to bring to the table on-the-ground knowledge about your customers, and valuable insights about pricing, distribution, packaging and ROI apart from a well-established distribution and marketing network.

Since a huge amount money and risk is involved in a joint venture, it requires a right set of effective planning and execution to ensure the success of joint venture. Apart from huge investment and capital, a successful joint venture stands on honesty, integrity, mutual understanding and communication between the partners. 

 

Dow Corning, Sony Ericsson, MillerCoors, Norampac, Penske Truck Leasing, and Owens-Corning are some of the successful joint ventures that can be referred as the case studies.

The Groundwork for the Joint Venture 

Before entering into a joint venture you should be very clear about your objectives and complete business model. You should have a clear picture about the investment amount, finance options and debts. Be very sure about your target audience and products you are offering through a joint venture. 

Collect complete knowledge about the foreign policies of that country and way they can be beneficial for you. Compile a detailed list of your competitors and discuss strategies with your partner to counter them.

You should also have the complete details of offered site, including output projections, transport and warehousing, testing and quality control, by-products and waste; supply, utility, and transport requirements along with estimated technology transfer costs. (source: Wikipedia)

Seek Services of a CEO Peer Groups

You can valuable suggestions about entering into a joint venture at a CEO peer group. At a CEO club, you get to meet the business leaders from non-competitive business domains. You can benefit from their experiences and knowledge in a CEO conference.

We have discussed the preparatory steps for a joint venture in this blog. We will discuss the other aspects of a joint venture in our next blog.