Group Project 2 JV vs
Edgar Leon 3
David Weagle 3
Roy Blanchard 1
Group Project 2, Joint Ventures vs. Franchises
Lufthansa/ANA Joint Venture vs. Ace Hardware
Joint Ventures and franchises have been advantageous strategic approaches to business for some time affording companies specific benefits for advancing or gaining market share. A joint venture (JV) is an agreement to begin a commercial enterprise that generally benefits both parties taking advantage of other companies’ existing, infrastructure, intellectual capital, customer base, market reach/research, credibility, responsiveness, etc. (Hull, 2013). There are few limitations to JV’s and the benefits are only restricted by the agreements that you reach, therefore JV’s are an obvious choice for businesses that are looking to grow yet lack the resources to effectively do so. Franchises present a very different approach to gaining market share and expanding location influences however, they have similar benefits to JV’s. As an enterprising entrepreneur one may see a market ripe for the entry of a certain business, yet our ability to begin a competing company in said market may be less than favorable. Enter the franchise, allowing the larger company as a whole to benefit from the entrepreneur’s experience and knowledge of a location or market area. The agreement then allows for very similar benefits (Franchise to JV), the franchisee will receive a strong brand identity which is usually well known, pre-established business partner relationships, training in management, sales, advertising and more (Adrian, 2010). As a whole the franchisee will have strong support from his/her parent company yet they may experience certain pitfalls such as, franchise costs (start up and ongoing), partial profits, limited to no control of how the business is run, pre-arranged suppliers with no deviation, etc. (Adrian, 2010).
Joint Venture
One of many reasons companies commit to JV’s is quite simply, global domination (in reality, market expansion). It
David Weagle 3
Roy Blanchard 1
Group Project 2, Joint Ventures vs. Franchises
Lufthansa/ANA Joint Venture vs. Ace Hardware
Joint Ventures and franchises have been advantageous strategic approaches to business for some time affording companies specific benefits for advancing or gaining market share. A joint venture (JV) is an agreement to begin a commercial enterprise that generally benefits both parties taking advantage of other companies’ existing, infrastructure, intellectual capital, customer base, market reach/research, credibility, responsiveness, etc. (Hull, 2013). There are few limitations to JV’s and the benefits are only restricted by the agreements that you reach, therefore JV’s are an obvious choice for businesses that are looking to grow yet lack the resources to effectively do so. Franchises present a very different approach to gaining market share and expanding location influences however, they have similar benefits to JV’s. As an enterprising entrepreneur one may see a market ripe for the entry of a certain business, yet our ability to begin a competing company in said market may be less than favorable. Enter the franchise, allowing the larger company as a whole to benefit from the entrepreneur’s experience and knowledge of a location or market area. The agreement then allows for very similar benefits (Franchise to JV), the franchisee will receive a strong brand identity which is usually well known, pre-established business partner relationships, training in management, sales, advertising and more (Adrian, 2010). As a whole the franchisee will have strong support from his/her parent company yet they may experience certain pitfalls such as, franchise costs (start up and ongoing), partial profits, limited to no control of how the business is run, pre-arranged suppliers with no deviation, etc. (Adrian, 2010).
Joint Venture
One of many reasons companies commit to JV’s is quite simply, global domination (in reality, market expansion). It
References: About.com. (2014). What is a Franchise? Retrieved November 20, 2014, from http://franchises.about.com/od/franchisebasics/a/what-franchises.htm. Ace Hardware Corporation (2014). Ace Corporate. Retrieved November 21, 2014, from http://www.acehardware.com/category/index.jsp?categoryId=34453606#. Adrian. (2010, October 4). Advantages and Disadvantages of a Franchise. Retrieved November 23, 2014, from http://blog.thecompanywarehouse.co.uk/2010/10/04/advantages-and-disadvantages-of-a-franchise/ All Nippon Airways adds Austrian & Swiss to JV, and eyes acquisitions, as Japan & France liberalise. (2012, July 16). Retrieved November 23, 2014, from http://centreforaviation.com/analysis/all-nippon-airways-adds-austrian--swiss-to-jv-and-eyes-acquisitions-as-japan--france-liberalise-78166 Gillespie, W., & Richard, O. (2011, February 1). Antitrust Immunity and International Airline Alliances. Retrieved November 23, 2014, from http://www.justice.gov/atr/public/eag/267513.htm Hull, P. (2013, June 21). Joint Ventures Provide Opportunities for Entrepreneurs. Retrieved November 23, 2014, from http://www.forbes.com/sites/patrickhull/2013/06/21/joint-ventures-provide-opportunities-for-entrepreneurs/ Joint Ventures. (n.d.). Retrieved November 23, 2014, from http://www.lufthansagroup.com/en/company/alliances/joint-ventures.html Martin, M. (n.d.). Franchise Vs. Joint Venture. Retrieved November 23, 2014, from http://smallbusiness.chron.com/franchise-vs-joint-venture-17547.html Peng, M.W. (2014). Global Business (3rd ed.). Mason, OH: South-Western CENGAGE Learning.