Managing Joint Ventures

I was intrigued to review the management of the joint venture when the topic recently there was a fellow entrepreneur national states in the near future this will form a joint venture with its partner, a cosmetics company from Singapore.

Nature of the joint venture, whether it be joint marketing, joint distribution, joint R & D, or a new business entity is an external network organization because legal ownership and management in the hands of two or more organizations. Thus the complexity is higher than mere co-branding. Topic Co-Branding Strategies writer himself had put forward in this column to your favorite magazine a few months ago. Alliance in a joint venture with a higher level than the scope of co-branding partnership is only about the use of brand equity among two or more brands.

In a rich awareness co-branding of both parties involved in the creation of the resulting value is relatively low, because it is intended to increase the exposure to each of the customer base to boost its brand awareness. In the endorsement values ​​of co-branding, co-operation carried out is intended to be endorsements of the value of the brand so that both partners can strengthen the reputation of its brand.

In a complementary competence co-branding, two brands are complementary combine to produce a product which is in essence not just add up the two halves, but each partner is committed to selecting its core competencies in order to create a superior product.

Formed joint ventures with partners who have the capability and resources that complement each other is a strategic move to seize opportunities. However, efforts to maintain its sustainability is a challenge. In the management of the joint venture at least there are four key areas, namely strategy, structure, culture, and human resources. Compared to running a co-branding strategy, management of joint ventures tend to be more difficult. Especially when compared to a single fighter management company and managed entirely by a single management. This analogy, between a company with one another often have different cultures and strategies based on the ditekuninya industry, consumers it serves and the competition faced.

The joint venture company which is the result of cooperation with two or more different companies, of course, will give birth to new and different cultures (joint venture culture). Culture is the most crucial aspects of the joint venture, although for the early stages is usually not so pronounced. Culture in the joint venture should not be weaker than the culture of each parent company. In a sense, able to accommodate two or more cultures that parent company could be quite different, for example, if family firms are still closed to form joint ventures with multinational companies. To that end, each must be familiar with his strengths, so it can be combined in a single rhythm. This culture must be able to move the joint venture can work quickly in every phase. The speed is accompanied by the flexibility to take the initiative, do not hesitate to get out of the grip (business as usual) through innovative breakthroughs.

Ownership and management together create strategies that run on their respective parent companies can not simply be applied in the joint venture. The strategy of the joint venture should be structured in such a way by considering all its aspects so as to fulfill its intended purpose. In formulating this strategy, there is a crucial factor to consider because it will greatly determine the success. First the good personal relations between partners, mutual understanding and accepting. Personal relationships - recognized or not - are largely determine the continuity of this cooperation. When the 'trust' between the partners has been cracked, then live "counting the days' continuance. So that the communication channel to be the next determining factor in the continuity of this joint venture. Openness of communication channels and procedures deal of time reporting becomes very important. Of course the determination of a reasonable excuse.

The most fundamental problems of the formation of joint venture is a sense of trust and reciprocity between partners. Trust can be formed if there is an agreement on the behaviors expected of each member firm partners, as outlined in the organizational culture.

In terms of organizational structure, a joint venture operated by a team appointed by mutual consent by each partner incorporated in it. Often the board of directors or other key positions occupied by people who are in fact an employee or a part of each parent company. In fact, each parent company has its own interests. Thus, to avoid conflicts of interest, the relationship between joint venture with each parent should be made as firmly and as clearly as possible. In addition, the principles of transparency and accountability must be upheld.

One way that can be taken in this regard is to raise at least one head of a respected neutral and have sufficient authority within the company. Neutrality is shown by the absence of both the organizational relationship between the leader and the importance of this with each of the companies that form the joint venture as an outsider is seen as more independent and free from conflict of interest. Outsider is expected to encourage objectivity in addition to a fresh perspective into the company. Not surprisingly, this outsider is usually chosen based on competence and proven experience.

The existence of a neutral leadership is not effective if not supported by a clear division of labor at every level, particularly at the helm. For example, anyone who is tasked to formulate a joint venture strategy, responsible for risk management, finance and others. The division of labor as that is the basis in assessing the performance of which is usually done formally every year, which became one of the assessment basis for granting rewards. Performance is usually someone in the joint venture was also monitored by the parent company where initially he was. Not rare, successful leaders in a joint venture withdrawn by the parent company to be promoted. Things like this certainly have a big impact on the joint venture.

Financially, accountability in the joint venture also involves the institutions established by an independent auditor. This becomes even more important when there is connection with transactions involving transfer pricing or the parent company.

Key executives joint venture should be a 'bridge' to improve the quality of the communication process and aligning diversity. Forming a right chemistry, the work atmosphere that is based on openness, mutual understanding, adaptability, cultural appropriateness and organizational trust. This process is followed up by accelerating the formation of internal & external relationships that can create lasting formulation of joint ventures