ZeePedia buy college essays online


Entrepreneurship

<<< Previous NEW VENTURE EXPANSION STRATEGIES AND ISSUES:JOINT VENTURES, ACQUISITIONS Next >>>
 
img
Entrepreneurship ­ MGT602
VU
Lesson 43
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
LEARNING OBJECTIVES
1.
To explain the methods for expanding the venture.
2.
To discuss the types of joint ventures and their uses.
3.
To discuss the concepts of acquisitions and mergers.
4.
To discuss the appropriateness and uses of leveraged buyouts.
5.
To discuss the different types of franchises.
6.
To identify the steps in evaluating a franchise opportunity.
JOINT VENTURES
With the increase in business risks, hyper-competition, and failures, joint ventures have increased.
A joint venture is a separate entity involving two or more participants as partners. They involve a wide
range of partners, including universities, businesses, and the public sector.
Historical Perspective
Joint ventures are not new. In the U.S. joint ventures were first used for large-scale projects in mining and
railroads in the 1800s.The largest joint venture in the 1900s was the formation of ARAMCO by four oil
companies to develop crude oil reserves in the Middle East. Domestic joint ventures are often vertical
arrangements made between competitors allowing economies of scale. The increase in the number of joint
ventures has been significantly throughout the 1990s.
Types of Joint Ventures
The most common type is that between two or more private-sector companies. Some joint ventures are
formed to do cooperative research. Another type of joint research for research development is the not-for-
profit research organization. Industry-university agreements for the purpose of doing research are also
increasing. Two problems have kept this type venture from increasing even faster. A profit corporation
wants to obtain tangible results-such as a patent-from its research investment, and universities want to
share in the returns. The corporation usually wants to retain all proprietary data while university researchers
want to make the knowledge available. Joint ventures between universities and corporations take many
forms, depending on the parties involved and the subject of the research. International joint ventures are
increasing rapidly due to their relative advantages. Both companies can share in the earnings and growth.
The joint venture can have a low cash requirement. Also, the joint venture provides ready access to new
international markets.
Such a venture causes less drain on a company's managerial and financial resources than wholly owned
subsidiary. There are drawbacks in establishing international joint ventures. The business objectives of the
partners can be quite different. Cultural differences can create managerial difficulties. Government policies
sometimes can have a negative impact on the venture. The benefits usually outweigh the drawbacks.
Factors in Joint Venture Success
One critical factor for success is the accurate assessment of the parties involved and how best to manage
the new entity. A second factor involves the symmetry between the partners. Another factor is that the
expectations about the results of the joint venture must be reasonable. The final factor is the timing. A
joint venture should be considered as one of many options for supplementing the resources of the
firm.
ACQUISITIONS
An acquisition is the purchase of a company or a part of it in such a way that the acquired company is
completely absorbed and no longer exists. Acquisitions can provide an excellent way to grow a business
and enter new markets. A key issue is agreeing on a price. Often the structure of the deal can be more
important to the parties than the actual price. A prime concern is to ensure that the acquisition fits into the
overall direction of the strategic plan.
95
img
Entrepreneurship ­ MGT602
VU
Advantages of an Acquisition
Established business.
The acquired firm has an established image and track record.
The entrepreneur would only need to continue the existing strategy to be successful.
Location is already established.
Established marketing structure.
An important factor that affects the value of a firm is its existing marketing channel and sales
structure.
With this structure already in place, the entrepreneur can concentrate on expanding to new target
markets.
The total cost of acquiring a business could be lower than trying to buy a franchise.
Existing employees.
The employees of an existing business can be important assets.
They know the business and can help the business continue.
Employees already have established relationships with customers, suppliers, and channel members.
More opportunity to be creative-More time can be spent assessing opportunities to expand or
strengthen the business.
96
Table of Contents:
  1. THE NATURE AND IMPORTANCE OF ENTREPRENEURSHIP:DEFINITION OF ENTREPRENEUR
  2. THE NATURE AND IMPORTANCE OF ENTREPRENEURSHIP:Possibility of New Venture Formation
  3. ENTREPRENEURIAL PROCESS/START UPS:GOVERNMENT AS AN INNOVATOR
  4. THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND:ENTREPRENEURIAL PROCESS
  5. THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND (continued…)
  6. THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND (continued…):CLIMATE FOR ENTREPRENEURSHIP
  7. THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND (continued…):PROBLEMS AND SUCCESSFUL EFFORTS
  8. THE INDIVIDUAL ENTREPRENEUR:ENTREPRENEURIAL BACKGROUND AND CHARACTERISTICS
  9. THE INDIVIDUAL ENTREPRENEUR (continued…):Personal Values, Work History, MOTIVATION
  10. THE INDIVIDUAL ENTREPRENEUR (continued…):ROLE MODELS AND SUPPORT SYSTEMS
  11. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES:INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES, Minority interests
  12. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES (continued…):DIRECT FOREIGN INVESTMENT
  13. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES (continued…):BARRIERS TO INTERNATIONAL TRADE
  14. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES (continued…):ENTREPRENEURIAL PARTNERING
  15. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES (continued…):SOURCES OF NEW IDEAS
  16. CREATIVITY AND THE BUSINESS IDEA:METHODS OF GENERATING NEW IDEAS, CREATIVE PROBLEM SOLVING
  17. CREATIVITY AND THE BUSINESS IDEA:PRODUCT PLANNING AND DEVELOPMENT PROCESS
  18. LEGAL ISSUES FOR THE ENTREPRENEUR:NEED FOR A LAWYER, PATENTS
  19. LEGAL ISSUES FOR THE ENTREPRENEUR:TRADEMARKS, LICENSING
  20. LEGAL ISSUES FOR THE ENTREPRENEURS:PRODUCT SAFETY AND LIABILITY, INSURANCE
  21. CREATING AND STARTING THE VENTURE:WHAT IS THE BUSINESS PLAN, PRESENTING THE PLAN
  22. CREATING AND STARTING THE VENTURE (Continued….):WRITING THE BUSINESS PLAN
  23. CREATING AND STARTING THE VENTURE (Continued….):
  24. CREATING AND STARTING THE VENTURE (Continued….):WHY SOME BUSINESS PLANS FAIL, MARKETING PLAN
  25. THE MARKETING PLAN:MARKET RESEARCH FOR THE NEW VENTURE
  26. THE MARKETING MIX:STEPS IN PREPARING THE MARKETING PLAN
  27. THE ORGANIZATIONAL PLAN:DEVELOPING THE MANAGEMENT TEAM, LEGAL FORMS OF BUSINESS
  28. THE ORGANIZATIONAL PLAN (Continued….)
  29. THE ORGANIZATIONAL PLAN (Continued….):THE LIMITED LIABILITY COMPANY
  30. THE FINANCIAL PLAN:OPERATING AND CAPITAL BUDGETS
  31. THE FINANCIAL PLAN (Continued….):PRO FORMA INCOME STATEMENTS, PRO FORMA CASH FLOW
  32. PRO FORMA SOURCES AND USES OF FUNDS:PERSONAL FUNDS, FAMILY AND FRIENDS
  33. PRO FORMA SOURCES AND USES OF FUNDS:COMMERCIAL BANKS
  34. BANK LENDING DECISIONS:SMALL BUSINESS ADMINISTRATION LOANS
  35. SOURCES OF CAPITAL:GOVERNMENT GRANTS
  36. SOURCES OF CAPITAL:PRIVATE PLACEMENT, BOOTSTRAP FINANCING
  37. CAPITAL SOURCES IN PAKISTAN:PROVINCIAL LEVEL INSTITUTIONS, FINANCIAL INSTITUTIONS
  38. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  39. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  40. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  41. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  42. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  43. NEW VENTURE EXPANSION STRATEGIES AND ISSUES:JOINT VENTURES, ACQUISITIONS
  44. NEW VENTURE EXPANSION STRATEGIES AND ISSUES (Continued….):DETERMINING THE PRICE FOR AN ACQUISITION
  45. ENTREPRENEURSHIP & PAKISTAN:GENDER DEVELOPMENT STATUS WOMAN AS AN ENTREPRENEUR IN PAKISTAN