International Joint Ventures (IJVs) are a useful means of overseas expansion for multinational enterprises (MNEs). What are IJVs? What are the circumstances under which MNEs internationalise using...

IJV:
An IJVs (International Joint Venture) is a partnership between two or more enterprises from different nations that share common interests in a market segment for their goods and services and share resources, expenses, market intelligence, revenues, and liabilities1. If each corporation participating in IJV cooperates in the manner that they have been ready to open market niches and information such as density of population, culture, and govt. policies are easily accessible from each corporation participating in the Joint venture, the joint venture will be prosperous. Their primary goal is to save money because the required start-up capital is divided among the companies, as is any risk that may arise during the operation. IJVs may collapse once the goal has been attained or when the partners' interests shift over time2.
Circumstances under which MNEs internationalize using IJVs:
International Joint Ventures (IJVs) are vital for the growth of MNEs through the employment of the internationalise approach, which aims to balance these enterprises' weaknesses by bringing them together in a pool. The strength of each company is then utilised to compensate for the weaknesses of the other.3 For instance, one company may lack the means such as equipment but has critical market data such as population culture, whereas another company may possess machinery but lacks knowledge. The following are some of the scenarios in which MNEs use IJVs to expand internationally.
1.
1 Westman, Christoffer, and Sara Thorgren. "Partner Conflicts in International Joint Ventures: A Minority Owner Perspective." Journal of International Management 22, no. 2 (2016): 168
2 Mata, José, and Pedro Portugal. "The termination of international joint ventures: Closure and acquisition by domestic and foreign partners. “International Business Review 24, no. 4 (2015): 678
3 Beamish, Paul W., and Nathaniel C. Lupton. "Cooperative strategies in international business and management: Reflections on the past 50 years and future directions." Journal of World Business 51, no. 1 (2016): 166
2. Insufficient financial resources
A multinational corporation may have the know-how, technology, and strategy to seize a new niche market situated overseas, but it is unable to do so due to a lack of finance4. As a result, it seeks for another company in its target country that offers products and services equivalent to its own, as well as the opportunity to contribute to the new company's capital creation.
3. Advantages that are unique to each location
Given the location of sources such as manufacturing resources, a multinational corporation may be forced to form a joint venture with some other international corporation. The corporation evaluates the profit margins available and discovers that importing raw materials will be more expensive, resulting in a price increase for its products. This includes trade policies enforced by the other country, such as tariffs, which will be used to determine if conducting business in that place is feasible4.
4. Ownership-specific advantage
MNEs use foreign joint ventures to internationalise since they may get intellectual property like branding, innovations, designs, and copyrights from a single partner. As a result, if additional corporations wish to enter the market, they must first negotiate how they might build a coalition that benefits both parties5
5. Environmental changes
The environment changes can be both internally and externally. Executive actions such as moving to a different market potential and thus looking for another company located in such new market who would be ready to be doing business with it may be part of the internal environment. The decision to enter into an alliance was made since there are many inherent risks in undertaking
4 Larimo, Jorma, Huu Le Nguyen, and Tahir Ali. "Performance measurement choices in international joint ventures: What factors drive them?." Journal of Business Research 69, no. 2 (2016): 880.
5 Oehmichen, Jana, and Jonas Puck. "Embeddedness, Ownership...