IGCSE, A Level Business Student Forum

Q14 Analyse the disadvantages of a Joint Venture. [6]

Possible Structure:
[KN]
[AN]
[AN+]

[KN]
[AN]
[AN+]

(kn) the level of investment might not be matched
(an) however revenue will still be distributed equally making the one who invested more demotivated
(an) she will not give optimum performance
(kn) difference of opinion
(an)which would lead to conflicts leading to wastage of time
(an+)and hence missed opportunities

[KN] Decision Making
[AN] Joint ventures require collaboration and consensus between the partnering companies
[AN+] The need to compromise and reach agreements with partners may result in slower decision-making and hinder a company's ability to respond quickly to market changes.

[KN] Loss of autonomy
[AN] When entering a joint venture, a company must relinquish some level of autonomy and control over its operations.
[AN+] In cases where the partners have conflicting goals or values, this loss of autonomy can lead to frustration and challenges in maintaining the original company's identity.

[KN]Conflict of Interest and Objectives
[AN]This misalignment of interests can lead to conflicts in decision-making, resource allocation, and overall strategic direction.
[AN+]this causes delays in the businesses growth and worsens relations overtime

[KN]shared control and decision making
[AN]this can be particularly challenging if the partners have different management styles, communication preferences or risk tolerance levels
[AN+]this may cause wrong decisions being made as they sometimes act without consulting the other

[KN] Shared Profits
[AN] Companies in a joint venture may need to split the financial gains with their partners.
[AN+] Potentially resulting in a lower return on investment compared to fully owned projects.

[KN] Loss of Control
[AN] Each partner in a joint venture typically has a share in the decision-making process, which means that neither party has full control.
[AN+] This loss of autonomy can be frustrating for companies that are used to making independent strategic.

[KN]hard to leave
[AN]if partner want to quit it can be tricky and expensive
[AN+]so they might have to sell their part for less money or go through a complicated process

[KN]ARGUING ALOT
[AN]companies in joint venture might fight about what to do and hoe to do because they have different ay of doing thing,
[AN+]thus this lose productivity of the partner ,

ayyan ali wrote: ↑Thu Nov 02, 2023 7:53 pm [KN]hard to leave
[AN]if partner want to quit it can be tricky and expensive
[AN+]so they might have to sell their part for less money or go through a complicated process

[KN]ARGUING ALOT
[AN]companies in joint venture might fight about what to do and hoe to do because they have different ay of doing thing,
[AN+]thus this lose productivity of the partner ,

The first point is wrong and should be changed. The second point is utterly ridiculous as partners go through a partnership agreement before this.

ayyan ali wrote: ↑Thu Nov 02, 2023 7:53 pm [KN]hard to leave
[AN]if partner want to quit it can be tricky and expensive
[AN+]so they might have to sell their part for less money or go through a complicated process

[KN]ARGUING ALOT
[AN]companies in joint venture might fight about what to do and hoe to do because they have different ay of doing thing,
[AN+]thus this lose productivity of the partner ,

The first point is wrong and should be changed. The second point is utterly ridiculous as partners go through a partnership agreement before this.

(Kn) profits shared (an) in a joint venture the profits are divided among the two benefactors (an+) this results in less profit per person resulting in less motivation

(Kn) consultation required leading to wastage of time (an)since both the firms need to consult one another and come to a unanimous decision, there would be a lot of time wastage for both to agree on one point (an) this will lead to wastage resulting in loss of efficiency

[KN] shared profits and losses
[AN] Profits are being shared with the partners as well as the losses and cannot keep all the finances to your self.
[AN+] Thus less profit is shared per person resulting in lack of motivation.

[KN] Shared Control
[AN] In a joint venture decision making is shared between the participating companies.
[AN+] This can lead to conflicts making it harder to run the business the way you want.

[KN] Decision making
[AN] my joining captain you also have to give away some ownership of making important decision
[AN+] Due to this there would be poor management

[KN] conflict
[AN] when two managements are controlling the business it is possible that both would not agree on single decision
[AN+] this would result in low efficiency

[KN] Control is also shared.
[AN] Decision making is also shared between the partners.
[AN+] This can lead to conflicts between the partners making it harder to run the business.

[KN] Profit is shared between the partners.
[AN] Profits are being shared with the partners so the partners cannot keep all the money earned from the sales.
[AN+] This results in less profit is give to each person resulting in less savings

[KN] Conflicts.
[AN] Differences in goals, strategies, and decision making can lead to disparities between the two ventures. This can hinder effective cooperation.
[AN+] Thus this can result in slow decision making which can question business long term success.

[KN] Shared profits.
[AN] When profits will be shared b/w the businesses this may result in low financial reward received to each business.
[AN+] Thus this can lead to low motivation as they could have gotten a chunk of share if they operated separately and independently.

Kumail Alvi wrote: ↑Thu Nov 02, 2023 3:04 am [KN] Shared Profits
[AN] Companies in a joint venture may need to split the financial gains with their partners.
[AN+] Potentially resulting in a lower return on investment compared to fully owned projects.

[KN] Loss of Control
[AN] Each partner in a joint venture typically has a share in the decision-making process, which means that neither party has full control.
[AN+] This loss of autonomy can be frustrating for companies that are used to making independent strategic.

both analysis points are lacking in a clear sense of direction and impact

[kn] each business has their own style of operating
[an] thus when two businesses collaborate for a temporary amount of time it can cause disagreements and conflicts amongst one another
[n+] leading to slower decision making and thus slower expansion
[kn] if any mistake takes place causing the business plan to fail near closure time
[an] it will lead to arguments and both businesses having to bare the cost of the mistake
[an+] leading to the entire idea going into vain in the end