Reasons of joint venture failure
Nowadays, there are so many researches indicated the failure of joint venture. In fact, joint venture leads a huge advantage and benefit. Ironically it is a tough job, and there is only a little amount of successor. The most common failures toward joint venture business are insufficient planning, lack of communication, difficult to integrate different organizational culture and wrong strategy used.
There is often a joint venture plans consisting of nothing more than a statement of each party’s intended contributions to the project and their respective share of the profits. Failure in planning indicated an incomplete plan. Objective, mission and vision for a company would not be achieved without a concrete plan. Apparently, in order to be successful, a joint venture business ought to ready a written document, which is consisting of entire plan throughout an organization, and it must be agreed by all parties.
Lack of communication would be another common failure to joint venture. Communication plays an important role in order to bond everyone within an organization as an individual. What if an organization does not communicate their objective, goal clearly? It may lead misunderstanding even worse situation. Different culture among individual within organization is a main cause to misunderstanding. Lack of communication with other due to different background of people because they are using different language, will finally convey a vague message and end up with misunderstanding.
Next, joint venture represents combination of two or more companies. The joint venture partner firms may have different corporate cultures, view and management style, resulting in poor integration and corporation. Hence, in assessing partner firms, an organization should perform the same compatibility and integration analysis they would do on an acquisition