International Business Strategy Essay Example | Topics and Well Written Essays - 1500 words - 4

International Business Strategy - Essay Example 30% of the 1100 joint ventures shaped before 1967 between one of the US firm and the company from the other developed nation did not survive largely due to organisational or strategic changes made by the management (Killing, 1982). The paper attempts to explore some key reasons behind the failure of large IJVs; at the same, it will also find the specific success factors of IJVS in emerging economies. Cultural difference between partners is considered one of the principal reasons that come in the way to the success of joint ventures. Before forming a joint venture, the companies do not conduct compatibility analysis. Most of the time, their management style differs from each other. One could be more decentralised in its decision making process while the other partner believes in more control and does not provide enough freedom to its line staff. Even after forming a joint venture, no efforts are made to create a suitable mix among the staff making the joint venture nonfunctioning. Farkas and Avny (2003) argue, "Difference in organizational culture is the reason for performance gaps in joint ventures rather than national culture differences. They also state, "The influence of cultural difference on the performance of international joint ventures is indirect, but highly influenced by the level of trust between its partners†. The researchers studied those joint ventures where one of the partners hailed from Israel. Cultural differences between western multinational enterprises and Japanese companies have also been determined as the factor behind the failures of their joint ventures (Brown et al. 1989). Chryslers merger with Daimler is worth mentioning here that could not evoke successful outcomes due to cultural mismatch between them. The Chrysler division was a profitable division prior to merger but its performance deteriorated after the merger. Management undertook several layoffs at Chrysler following the merger that was never anticipated in the beginning.