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According to
Jordan D. Lewis, there are three possible JV
governance arrangement: full equality; policy
equality, and lead parent arrangement. Generally
speaking, full equality gets the best from both
parents, while the lead parent form makes
governance easier.
These governing
structures are Full Equality Arrangement, Policy
Equality, and Lead Parent Arrangement. |
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The full equality arrangement
is essential for JVs that depend on both parents for continuing
substantial know-how inputs, such as technical, managerial or market
expertise, at policy and operating levels. It will also help produce the
best results from a JV that is closely tied to both parent's activities.
You should also use full equality in JVs with rivals, to ward off
perceptions
of bias or a chance for operating imbalances.
The full equality arrangement usually requires equal ownership (50/50)
to make parents more willing to share decision-making, risks and
rewards.
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Policy equality
encourages both parents' know-how inputs at the policy level and is
easier to manage than the full equality form. If you don't expect
substantial, ongoing operating-level ties to both parents, and if your
firms are not rivals, then policy equality is easier to manage than full
equality.
The policy equality arrangement also
usually requires equal ownership (50/50).
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Lead parent arrangement
is preferable when the situation does not call for equality in
governance which takes more effort. In such ventures, one partner runs
the JV while the other one has a voice and veto on designated matters.
Use this option to share the ownership and output of a production or
service facility. |
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JV Business Plan
International JVs
Joint Venture Checklist
Why JVs Fails |
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