Discuss the Various Advantages and Disadvantages of Full Ownership Versus Joint Ventures.

Full ownership is when the owner or firm wants to have full control over “business plans and strategy (299)”. They feel as though any outside input will decrease their ability to be successful, or foreign inputs will somehow impact management negatively. So, obviously the only advantage of full ownership abroad is control, which is not necessarily needed for success. The disadvantage to full ownership is the firm may not be able to attain exclusive market information, because their lacking the ability to access it. Local firms may not want to share valuable information to keep competitive pressure low. Another downside to full ownership is that the local government fears profit repatriation, and the firm will keep the profits for headquarters, therefore making it believed the performance abroad is lacking productivity. Governments abroad will set various laws less attractive to full ownership to ensure that profit repatriation is fair to all parties involved and that the money is reinvested locally.

Joint ventures allow for a collaboration of foreign and local entities. The advantages to the joint venture are valuable to both sides. There’s definitely less control, but assets, liabilities, and equity are shared, therefore the risk is spread evenly unless otherwise agreed upon. There’s a win-win situation created from the start for everyone involved if the firm is successful. The resources available in a joint venture situation allows for a better outcome, because each partner may have access to needed information such as people, technology, government and political influences or policy, and cultural differences. The disadvantages are lack of communication, which could strain the joint venture relationship. The problems that may arise are “conflicts of interest, problems with disclosure”, disagreements over profit sharing, lack of interest, and loyalty to the project. All of these disadvantages can be eliminated in my opinion by addressing these issues from the...