NCBA&E

DHA CAMPUS BARKI ROAD LAHORE

SUBMITED BY:
. Musaddiq Hussain
.Waqas Haider Bhatti
.Waseem Ahmad
.Abdul Aleem
.M Ahsan Shabir
.Atif
Ali

PROJECT OF
INTERNATIONAN
BUSINESS
SUBMITED TO:
MIS ANAM AMEEN

OUT LINES OF
PROJECT
. Definition of joint venture
business.
.Features of joint venture
business.
.Advantages of joint venture
business.
.Disadvantages of joint venture
business.
.Definition of Wholly owned
subsidiary company.
.Parent company.
.Advantages of parent company.
.Disadvantages of parent
company.

.Conclusion.

What is a Joint Venture?

A business arrangement in which two or more parties agree to
pool their resource for the purpose of accomplishing specific task
in joint venture each of the participant in responsible for profits or
losses and costs associated with its.

Essential features of a joint venture listed as

follows:
The purpose is to execute a particular venture or project
No specific firm name is used for the joint venture business.
It is formed by two or more persons.
It is of a temporary nature. Hence, the agreement regarding
the venture automatically stand terminated as soon as the
venture is completed.
The co-ventures share profit and loss in the ratio.

The main advantages of a joint venture are:

Sufficient Resources:
Since two or more persons pool their resources, there is
sufficient capital available.

 Ability and Experience:

In joint venture the different ventures may be having
different skills and experience. The benefit of their common
wisdom will be available to the venture.

Spreading of Risk:

The co-ventures agree to share the profits and losses in a

particular ratio. This implies that the risk is also borne by
them in that ratio.

More resources:
Since two or more firms join together to form a joint venture,
there is availability of increased capital and other resources.

Access to new markets:

By engaging with a foreign collaborator, the products and
services can be marketed in a foreign country.

New and improved Technology:

One partner may have the new and improved technology but
do not have the resources. Other partner may have
resources like capital but do not have the technology. In such
causes joint venture can fetch new and improved technology
as well as great resources. By engaging a foreign partner,
improved foreign technology can be availed from it's foreign
collaborator.

Exchange of Products:
Joint venture companies can offer their existing product to
sell through the partners network and share the profit. Both
JV partners can do the same. By exchanging products and

services of the partner, they can diversify the product basket

and sell it to their existing customers and increase the profit.
Disadvantage in the joint venture form of business.
It takes time and efforts to form the right relationship.
The objectives of each partner may differ. The objectives
needs to be clearly defined and communicated to everyone
involved.
Imbalance in the share of capital, expertise, investment etc.,
may cause friction in between the partners.
Difference in the culture and style of business lead to poor
co-operation.
Lack of assuming responsibility by the partners may lead the
collapse of business.

Lack of communication between the partners may affect the business.

Wholly Owned Subsidiary

Definition:

A wholly owned subsidiary is a company that is completely

owned by another company called the parent
company or holding company.

Parent company :
whose common stock is 100% owned by another company,
called the parent company.

Advantages:
The parent subsidiary structure isolates risks because the
two companies are separate legal entities. The losses at a

subsidiary do not automatically transfer to the parent

company.
The parent can exercise control over a subsidiary if it owns a
large block of its stock, but not necessarily a majority of the
shares. Even a fractional ownership of the shares of a widely
held company could result in effective control.
The parent-subsidiary operating structure allows for greater
diversification and increased efficiencies partly because
senior management at the parent company does not have to
be
involved in the operational details of its subsidiary,
according to "Rating Parent/Holding Companies and Their
Subsidiaries," a 2010 document by the Dominion Bond
Rating Service.

Disadvantages:
The parent company does not have complete access to the
cash flow of the subsidiary, unless the parent controls 100
percent of the shares.
To maintain its image and reputation, the parent company
may have to pay for the subsidiary's debts even if it has no
legal obligation
Lending institutions may require guarantees from the parent
before lending to one of its subsidiaries.

The parent company could be liable for damages if an

operating subsidiary violates the law or is subject to
enforcement actions, says Dominion Bond Rating Service .

Conclusion:
It is concluded that the joint venture business is better then
the subsidiary company and parent company because of

different businessmen joint together own businesses and

becoming a new business with the name of a new name of
business or a combine name business. The main advantage
of joint venture business is that we can understand the
customs of other company or other country are easily come
into mind so for the time of running business we have no
problems.