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Most Common Causes of Joint Venture Failure
Research indicates that 50 to 70% of all
joint ventures fail. Not many
CEOs of joint ventures
characterized their venture as "very successful".
The most common causes of failure cited by CEOs are:
Cultural and ideological
top the list. In
evaluating joint venture partners, most companies don’t perform a
proper compatibility and integration analysis. Neither make they a
thorough evaluation of
culture and management style. As a
result, they fail to find a way to blend their differences, which
makes their joint ventures unstable.
Poor or unclear leaders is
another top reason of joint venture failure. Too often, joint
venture partners insist on sharing a project leadership role. When
the parties disagree, a standoff occurs. If the parties don’t agree
from the very beginning who will have day-to-day operational control
of the project and how fundamental decision will be made, the JV is
bound to fail.
Major Causes of Failure in Leadership
Insufficient planning is
also one of the most prevalent reasons for failed joint ventures.
Too often, a joint venture “plan” consists of nothing more than a
statement of each party’s intended contributions to the project and
their respective share of the profits. This seldom works.
parties wish their joint venture to succeed, they should agree to a
comprehensive written plan upfront. The plan should include
provisions for future contributions, logistical issues, governance
of the joint venture, dispute resolution, ownership of
jointly-developed assets, including intellectual property; The term
and termination of the joint venture, including provisions for
winding up its business.
Other reasons of joint venture failure
include poor commitment; disagreement over operating policies,
strategies, and tactics; and differences in the approach towards
management style and systems
Joint Ventures / Partnerships,
Joint Ventures: Minimizing Risk and Maximizing Success,
Close Connections, Ranjit Shastri
Trusted Partners, Jordan D. Lewis
Joint Ventures Revealed, PlugInForProfit
Mastering Alliance Strategy: A Comprehensive Guide to Design, Management, and
Organization, James D. Bamford, Benjamin Gomes-Casseres, Michael S.
Strategic Alliances: Three Ways to Make Them Work (Memo to the Ceo),
SMART Business Architect,
Harnessing Cultural Intelligence (CQ),
About Joint-Venturing: The 8 Key Critical Factors of Success,
Competitive Advantage: US
China and United States
Russians: Comparative Character
Features (a slide show)
Preliminary MoU between Prospective Joint Venture
Joint Venture Agreement:
3 Partnership Secrets