A Review of Literature on How to Manage International Joint Venture

A of on How to Manage International Joint Venture Successfully - Literature review Example An IJV represents a relationship between voluntary cooperative partner companies, in which these companies maintain their independence and objectives. However, in the frame strategic alliances, an antonym of cooperative behavior is opportunistic behavior, the latter being understood as mismatch of expectations and preferences (current or future) of one partner (Michael and Louis, 1989). Key moderating measures of opportunism are increased control over the IJV by members in order to receive a portion of fair income (Feya and Beamishb, 1999). Discussion Among the various models of cooperation, international joint ventures are considered as the preferred mode of entry by firms (Reinier and Maria, 2009). However, the rate of failure of these organizational forms remains high. In addition, the IJVs are known for their fragility and their heterogeneous performance (Reinier and Maria, 2009). Several cases of IJV experience a failure due to the emergence of a conflict between the partners. A mong these cases, we can cite the example of the partnership between the French group Danone and Chinese Wahaha established in the beverage industry (Pothukuchi et al., 2002). The two groups signed an agreement in 1996 to create a joint venture, Wahaha Joint Venture Company, with 51% owned by Danone and 49% owned by the Chinese partner. After nearly a decade of fruitful collaboration, the relationship deteriorated and conflicts erupted in 2006. Indeed, Danone discovered that its partner violated non-competition clauses specified in the contract. The Chinese products are similar to those marketed by Danone. This conflict led the transfer in 2009 of shares in Danone joint entity with its Chinese partner. Studies on international joint ventures have dealt with various topics: the choice of partner, the formation of international joint venture, control mechanisms and inter-firm trust and the performance of the alliance. Some of them are focused on the instability of IJV (Reinier and Mar ia, 2009) and particularly on the determinants that affect the outcome of this relationship. In contrast to our knowledge, a few studies have attempted to introduce management tools that can help enterprises to manage conflicts. In this context, the work of Mjoen and Tallman (2003) proposed a management tool change during the phase of post-merger integration and acquisition. The purpose of this article is to provide the first theoretical approach to educating managers of joint ventures to develop management tools to manage crisis conflicts. These conflicts can occur throughout the formation process of IJV, hence the need to mobilize. Indeed, despite the large number of conflict researches and those on IJV crisis management, few of them are interested in bringing these two issues together (Mjoen and Tallman, 2003). It is in this context that our research will follow the following plan: firstly, this research focuses on the instability and conflict in the IJV and secondly, this resear ch provides the tools of crisis management and discusses how to better manage the conflict within the framework of the partnership relations. The International Joint Ventures and Conflict The Instability of International Joint Ventures The international joint venture is a form of alliance between companies involving creation of a new independent legal structure

The accounting policies of Marks and Spencer Essay

The accounting policies of Marks and Spencer - Essay Example   The first part of the report analyses the development of two accounting policies regarding tangible fixed assets and intangible one. To make the analysis more critical, comparisons with the main competitors of Marks and Spencer are drawn illustrating the controversial development of the selected policies. The second part of the report deals with the analysis of transition from UK GAAP to IFRS with specific respect to the following issues: treatment for property, property leases, employee benefits, share-based payments, intangible assets, and financial instruments. During their lifetime companies acquire property, which should be treated as assets according to the accounting standards. Meanwhile most of the property types have a 'lifetime' span, a time period, called useful economic life, during which an asset is used. To reflect the useful economic life in financial statements, profit and loss account receives regular portion of the cost of an asset. This expense is known as depr eciation. In other words, depreciation represents the extent to which economic value of an asset has been consumed by the business. There are different accounting policies on depreciation, but the most commonly used two are straight line depreciation and reducing balance. The one that is used by Marks and Spencer is the straight line depreciation. "Depreciation is provided to write off the cost or valuation of tangible fixed assets, less residual value, by equal annual instalments" (Marks and Spencer, 2005a, p. 33). That means the company pays the cost of an asset minus its value after its useful economic life expires by equal portions annually. Thus, fixtures fittings and equipment as a type of property has useful economic life of 3-15 years in the accounting policy of Marks and Spencer - that means, during that time the company annually pays its cost less residual value divided into 3-15 equal portions. Another popular policy of depreciation is reducing balance. In this case the d epreciation in each year is calculated as the percentage of the un-depreciated value. For instance, if the purchase cost of an asset is 100 and the reducing balance rate is 20% then the first year depreciation is 100*0.2=20 and the second year depreciation is (100-20)*0.2=16. The reducing balance rule is used to reflect the fact that the value of some assets falls more rapidly in the first years of use than in the last ones. As can be seen in theory the reducing balance policy can go on forever, with annual portions reducing ad infinitum. Generally, after 95% of the initial cost has been depreciated all the rest is written off in the next portion. The difference of these two methods is as follows: while the straight line depreciation is the simplest of all methods, the reducing balance allows taking the advantage of larger tax deductions in early years.