Forms of entrepreneurial activity. Joint business activity
When joint entrepreneurial activity a commodity producer organizes a business in foreign markets with the involvement of local partners or partners from third countries. At the same time, the parent company is not the full owner of the joint structures being created. Forms of joint enterprise activities: contract manufacturing; international licensing; international franchising; joint venture; strategic alliance; contract management.
Contract manufacturing- a foreign company, in accordance with the concluded agreement (contract), transfers to a certain enterprise the production of certain products, which the company itself sells in markets that are attractive to it. International licensing - involves the transfer by a company (licensor) of the right to own something to a foreign enterprise (licensee), which represents some value for the latter, for which he agrees to perform certain work or make an agreed payment. This right is expressed in the receipt of a license by its applicant.
International franchising The right to act on behalf of a large company (franchisee) is obtained by a small company or private entrepreneur (franchisor) in a foreign market as a result of concluding a contract between them. In accordance with such a contract, the franchisee generally transfers to the franchisor the right to use its name, trademark, technology, and business management system.
Direct investment involves the creation of its own subsidiaries controlled by the company. The structure through which the company carries out its business activities in a separate foreign market is 100% owned by it. Among the own structures created by the company to enter certain foreign markets as part of direct investment, preference is usually given to:
Trade missions;
Foreign trade branches - a structural division of a company in a specific foreign market
Foreign trading companies - own commercial enterprise, operating under general management parent company and in accordance with local legislation
For foreign enterprises - located in one of the countries in which the company has its subsidiaries and sells goods of a certain assortment group.
Transnational corporations.
The choice of method of entering a foreign market affects the efficiency of the company’s further functioning. Factors:
Internal factors: the size of the company and its experience in foreign markets. Small firms are better off pursuing export opportunities because they do not have sufficient resources to exercise greater control over operations. Availability international experience. Product characteristics.
External factors: social and cultural differences in individual countries, the presence of business risks in them, the market capacity of each country and its growth rate, the presence of trade barriers, as well as the level of competition and the availability of distribution channels.
Factors characterizing the degree of attractiveness this method access to foreign market: level of risk, ability to exercise control and flexibility. If the firm does not want to take much risk, it will choose methods of direct or indirect export or licensing, since they require less financial participation or management resources
Factors characterizing transactions in foreign markets.
Joint ventures make it possible to share the risk, financial obligations and costs of establishing local distribution networks and hiring local staff. At the same time, significant efforts are required to negotiate and manage joint ventures. However, the method that requires the least resources and effort and is associated with the least risk promises the least benefits and risks lost opportunities.
When choosing a method for a foreign market, it is important to consider the degree of control that the company's management will exercise over operations on the foreign market. international market. The level of control is also closely related to the level of resource participation.
Indirect exports provide the least amount of control over the terms of foreign sales. Maximum control can only be ensured in one's own subsidiaries with direct investments.
Joint entrepreneurial activity is one of the ways to penetrate foreign countries; This method involves joining forces with commercial firms partner states to increase financial and production capacity.
A key feature of a joint venture is that the parties to the agreement are not debtors or lenders to each other. Property needed for joint activities, is not isolated, so both parties take risks and are liable for the total debt in shares.
Joint: types
It is customary to classify joint entrepreneurial activities into 4 types:
- Licensing– the most common and simplest way of joint entrepreneurship. Wanting to enter the market, the company enters into an agreement with the licensee, offering to take advantage of such advantages as a trademark, scheme production process. As a result, both parties benefit various kinds: the licensor enters a new market with minimal risk, and the licensee gets rid of the need to start promoting the brand from scratch. Licensing has similarities with franchising, however, the licensee, unlike the franchisee, does not have to pay. Licensing also has its disadvantages: firstly, the licensor has virtually no control over the licensee, who can harm the licensor’s reputation through inept activities, and secondly, if the licensee is successful, the licensor may find that he has raised a serious competitor.
An example of entrepreneurship in the form of licensing is the activity of the Coca Cola company, which licenses the use of the concentrate necessary for the production of the drink (as well as the concentrate itself) to companies from all over the world.
- Contract manufacturing– finds a local manufacturer qualified enough to produce the company’s goods without compromising quality. The disadvantage of this method is the impossibility of constant quality control, the advantages are minimal risk and the ability to organize production faster than when opening a new plant.
- Contract Management– a large organization provides (most often in the field of management), a local company forms. The subject of export in this case is management services. This method has one drawback: the local company requires personnel qualified enough to use the know-how as efficiently as possible.
- Joint Ownership Enterprise. Local and foreign companies can create a new enterprise that they will manage together. A foreigner can also acquire a share of an already operating business. There are pros and cons to this practice. The following are considered advantages:
In the practice of modern international business, various, including quite flexible, forms of international cooperation have been developed, which include:
· co-production - production of a complex product or its components by one of the foreign partners;
· contract management - transfer of know-how in the field of management by one of the partners to another;
· franchising - issuing a license for a certain activity with the provision of additional management, marketing and technological support;
· strategic alliance - a formal or informal alliance created with the aim of pooling resources to solve problems of reorganization, increasing market efficiency, etc., or achieving “economies of scale”, or for other purposes;
· a joint venture is one of the most common forms of strategic alliance, associated with the creation of a new company as legally and economically independent enterprises;
· multinational company - the most “tough” form of international cooperation, based on the mechanism of shareholder participation and/or other methods of corporate control.
A joint venture is an international firm created by two or more national enterprises for the purpose of achieving the most full use the potential of each party to maximize the beneficial economic effect of their activities. It is a type of enterprise with foreign investment and, in accordance with current Russian legislation, is defined as an enterprise with equity participation of Russian and foreign investors. An important feature of a joint venture should be considered the presence of at least one foreign investor among its founders (participants), along with the national one.
The concept of an international joint venture is used to refer to enterprises (firms) jointly owned by two or more owners (legal and individuals), based on mixed ownership of different countries.
Important motivations for creating joint ventures are the difficulties of independent penetration into foreign markets, insufficient knowledge of the foreign economic environment and the need to combine the efforts of partners in conditions of growing uncertainty. economic development, and sometimes national legislation limiting 100% foreign ownership in certain industries and areas. Special meaning at the same time, it belongs to the exchange of organizational, managerial and technological experience, the mutual use of the sales and service infrastructure of partners.
The goals of a joint venture may be different. The main and most common ones include:
1. obtaining modern foreign technologies (in contrast to traditional licensing in joint ventures, the seller of licenses becomes a co-owner of the enterprise using them, extremely interested in receiving high profits), overcoming the barriers of protectionism in international technology transfer;
2. increasing the competitiveness of the product on the market; expanding product exports, entering the foreign market through:
Studying the specific needs of foreign markets, carrying out a set of marketing activities;
Organizing the production of products in accordance with the quality parameters characteristic of the world market or in accordance with the standards adopted in the countries where it is planned to sell them;
Entering the markets of countries that apply strict trade protectionism and restrictions on foreign investment without the participation of local enterprises and firms.
3. attracting additional financial and material resources, the possibility of using the resources available to one of the founders of the joint venture at prices significantly lower than average prices on the world market;
4. reduction in production costs based on the use of transfer (intra-company) pricing, saving costs on product sales;
5. improvement of material and technical support by obtaining from a foreign partner scarce material resources, semi-finished products that they do not produce, components and parts (“screwdriver” production).
The emergence and spread of joint ventures as one of the forms of coordinated activities of two or more partners aimed at achieving a common goal was facilitated by the processes of internationalization of the economies of different countries and an increase in the export of capital. Integration trends in the field of specialization and cooperation of production have a certain influence on the development of joint ventures. Joint ventures as one of the most promising organizational forms of business became widespread in the 1970-80s in countries Western Europe and Asia, and then in the countries of Central and of Eastern Europe, as well as the CIS.
Joint ventures have become a means of attracting advanced foreign technology and modern management experience. Thanks to them, the export of capital is facilitated, including in its productive form, and investment projects, the implementation of which is beyond the power of one company. In addition, markets in new regions are easier to develop with the help of local partners, especially since enterprises with equity participation of foreign and national investors often enjoy tax breaks. Being international in form, joint ventures have acquired a special status in the country of official legal registration. In all countries, the activities of joint ventures are regulated by special legislation, including tax, economic, etc.
Huge capacity Russian market, various Natural resources, skilled labor are attractive factors for foreign investment in the Russian economy. In accordance with current Russian legislation, joint ventures can be created in the form business partnerships and societies.
In its own way organizational structure joint ventures can be classified as closed or open joint stock companies, limited liability companies, etc., while the share of each party in the authorized capital of the joint venture is strictly specified in constituent documents. Profit distribution occurs, as a rule, in proportion to the share of participation in the authorized capital of the company.
Distinctive feature The management structure of a joint venture is the equality of the parties in decision-making processes, control over the activities of the company, and strategic planning. Operational and tactical leadership is carried out supreme body management of the company appointed by the co-owners of the joint venture. Parity principles of company management allow each party to derive the greatest benefit from joint activities and contribute to the development of business cooperation.
The management structure of a joint venture fits within the framework of traditional company management schemes (functional, product, divisional, matrix, regional, etc.) and depends on the nature of the activity, the number of parties involved in the creation of the company, the degree of diversification of production and services provided.
Being a fairly flexible organizational form of management that allows you to use the experience, financial and other resources of companies various countries, joint ventures are becoming a kind of growth point for new forms of business. Using resources from different countries allows you to minimize costs and maximize profits, thereby increasing the return on your partners' invested capital.
Creating joint ventures abroad requires solving many management problems and taking into account the peculiarities external environment, stimulation work force. It is necessary to take into account the significant differences in cultural, commercial, economic and other areas of the countries involved in the creation of a joint venture. Personnel composition Parent companies usually have different assessments of labor productivity, remuneration levels, labor safety and put different assessments into the concept of subordination. There may also be large differences in the organizational cultures of the two parent companies and in the strategy for using human resources. Cultural differences influence the formation of a joint venture, as they are reflected in differences in approaches to goals, strategies, human resource policies, development opportunities and difficulties, organizational relationships, and communication priorities.
The legislation of a number of countries suggests that the presence of a foreign company in their market is possible only by concluding a contract with local firms for the production of goods in these countries. Even industrialized countries sometimes put pressure on exporters to establish joint ventures abroad.
Joint venture activity is the combination of some aspects of the production and marketing of goods and services with foreign companies. For example, the Dutch company Philips works with the Japanese companies GVC and Sony, owns the German company Grundig, and cooperates with the French company SIG-Alcatel.
Joint ventures (JVs) are created on the basis of licensing, production contract, management contract and joint (fractional) ownership.
Licensing gives a foreign company rights to the production process, trademark, patent, etc. in exchange for commission payments (royalties). A license agreement may also represent rights to intangible property for an indefinite period. Such property can be: formulas, processes, diagrams, etc. The use of licensing when creating a joint venture has economic, strategic and political motives.
Economic motives are that the licensor reduces the risk of creating production abroad, given the small sales volume, the danger of a competitor improving the product, and limited resources. Large firms with diversified production, revising their product range, focus their efforts on strengths their activities, which provide high profits. They abandon products and technologies that are not of interest at the time. This is the strategic motive behind the licensing agreement. But the company can change its strategy and terminate the contract, especially since their terms are short.
Political and legal motives underlie a licensing agreement when there are restrictions on foreigners acquiring property in the licensee country, whether or not protecting foreign property. By transferring the rights to the object of the licensing agreement, the company loses control over its assets. There is a need to provide for the following points in the license contract:
1) the conditions for its termination if the parties do not comply with the established requirements;
2) methods for checking the quality of goods and services;
3) obligations for expenses on creating a sales system;
4) geographical boundaries of the use of assets;
5) conditions for the use of innovative technologies based on knowledge transferred under a license agreement;
6) confidentiality of information under the license agreement.
In practice, there is a wide range of terms and amounts of payments under a license agreement. The terms of the licensing agreement are influenced by both factors specific to the agreement (exclusivity of the license, limitations on production volume, quality requirements, novelty of technology, etc.) and factors specific to the market (state licensing rules, level of competition among suppliers of similar technologies, political, business risks, etc.).
The price of the licensing contract is determined by both the licensor and the licensee in order to agree on the amount of payments. In this case, an upper and lower price limit is set. The upper price limit is calculated based on an assessment of the licensee's weighted average profit from using the technology and an assessment of the licensee's costs of purchasing the same technology from competitors or the costs of developing it independently.
The price floor usually takes into account the licensor's estimate of the costs of direct technology transfer or the zero-win price. Determining the cost of a license agreement is a very important point, since it is a contribution from one of the joint venture participants to authorized capital and management resources.
In international business, a joint venture is a partnership in which the partners share ownership, control over production and the income received. Partners can be: two foreign companies trading in a third country, a foreign company and state organization(enterprise) or a foreign company and a local one.
All larger number Firms are trying to enter international business quickly by forming strategic alliances with competitors, suppliers and customers. In a typical strategic alliance, two or three firms invest equal shares in a joint venture or sign agreements to share marketing, research, or production costs.
Fractional ownership It is used in different countries, but it is more developed in those industries where the need for capital expenditures and additional external resources is higher. The local government can also exert pressure on those foreign firms that have a strong influence on the economy of the recipient country.
The main reasons for creating a joint venture on a shared basis are as follows:
1) expand its activities in the geographical area;
2) prevent competitors from taking a dominant position in the market;
3) achieve a maximum increase in sales volume;
4) pressure from the government to share ownership with local shareholders;
5) reduce the severity of public and official criticism of the foreign company.
Many firms operating as a joint venture decide in advance who will own the controlling stake. If this issue is not resolved, then the company may lack clarity in choosing areas of activity.
Management contract – an agreement under which one company sells management services for managing an enterprise (equipment) to another company located abroad.
The need for a management contract arises in situations where:
1) foreign investments are expropriated by the recipient country, and the former owner is offered to continue managing the enterprise while local managers are trained;
2) new commercial projects provide that the contracted company sells both its equipment and services for its management;
3) management in order to improve the efficiency of the enterprise.
From the recipient country's perspective, the management contract eliminates the need for direct investment as a means of obtaining management assistance. For a service firm, contracts help avoid the risk of loss of capital when returns on investment are low and capital costs are prohibitive.
Production contract – an arrangement in which a firm enters into agreements with firms in a foreign market to produce products in that country. The company usually conducts marketing through foreign commercial subsidiaries. Such agreements are common in book publishing.
turnkey contracts- an arrangement under which one company designs, builds and trains personnel to operate equipment of a foreign company. In reality, all the purchasing company has to do is “turn the key” to start the equipment.
Lecture topic 4. NEW FORMS OF ENTREPRENEURSHIP WITHOUT FORMATION OF A LEGAL ENTITY
WITH development market economy In Russia, forms of entrepreneurial activity are becoming more and more diverse. They are either resurrected from past Russian experience and receive further development (simple partnership), or are perceived from foreign experience (franchising).
Joint entrepreneurial activity in the form of a simple partnership
TO concentration of efforts and coordination of actions of several enterprises or individual entrepreneurs to achieve common goals can in many cases be achieved by concluding a simple partnership agreement between them.
The legal institution of a simple partnership is established by the Civil Code of the Russian Federation. By simple partnership agreement (joint activity agreement) two or more persons (partners) undertake to pool their contributions and act together without forming a legal entity to make a profit or achieve another goal that does not contradict the law. The duration of a simple partnership is determined by agreement of the parties, but may not be included in the contract (in this case a simple partnership is assumed to be of unlimited duration).
Main feature of a simple partnership agreement is that its participants do not act in relation to one another as debtors and creditors, as is the case in other agreements. The participants in this transaction do not legally separate the property used by them for joint activities, and therefore are liable for common debts with all their personal property in equity or jointly.
Comrade's contribution everything that he contributes to the common cause is recognized, including money, other property, professional and other knowledge, skills and abilities, as well as business reputation and business connections. The partners' contributions are assumed to be equal in value, unless otherwise follows from the simple partnership agreement or actual circumstances. The monetary value of a partner's contribution is made by agreement between the partners.
It should be noted that the common property of the partners does not serve as a guarantee of satisfaction of their creditors for common obligations. Therefore, it is allowed to contribute not only real property, but also professional and other knowledge, as well as skills, business connections and business reputation. The property contributed by the partners, which they possessed by right of ownership, as well as the products produced as a result of joint activities and the fruits and income received from such activities are recognized as their common shared property, unless otherwise established by law or a simple partnership agreement or does not follow from the essence of the obligation.
Legal separation of the common property of participants from their personal property is usually carried out using it accounting on a separate balance sheet. Keeping such records can be entrusted to one of the partners (legal entity).
At conducting general affairs Each partner has the right to act on behalf of all partners, unless the agreement stipulates that the conduct of business is carried out by individual participants or jointly by all participants in the agreement. When conducting business together, each transaction requires the consent of all partners. In this situation, they have the right either to each sign an agreement on the transaction, or to issue a one-time power of attorney to one or more participants for this purpose.
If a member of a partnership made a transaction in the conduct of common affairs in excess of his powers(for example, having received the consent of the majority, but not all comrades), other participants doesn't matter will be considered obligated under such transaction, since their counterparties (third parties) are not required to know about the restrictions on the transaction that apply to this partner. In the case where they knew (should have known) about such restrictions (in particular, they did not verify that the person who made the transaction had the authority to act on behalf of all the partners), only the partner who made it will be recognized as a party to the transaction. However, the latter circumstance must be proven by the interested comrades themselves, otherwise the transaction is assumed to be concluded with their consent and in their common interests.
A participant in a simple partnership who acted in excess of authority or on his own behalf, in a situation where the transaction he concluded was necessary in the general interests of the partnership, has the right to demand reimbursement of his expenses from the other partners. If, as a result of such a transaction, other partners suffered losses, they also have the right to demand compensation from the participant who made the transaction.
Each comrade, regardless of whether he is authorized to conduct the common affairs of his comrades, has the right to familiarize himself with all documentation on the conduct of affairs.
The procedure for covering expenses and losses associated with the joint activities of the partners is determined by their agreement. In the absence of such an agreement, each partner bears expenses and losses in proportion to the value of his contribution to the common cause. It is obvious that in most cases, losses and expenses will be repaid primarily from the common property or a certain part of it, and only if there is a shortage of it from the personal property of the participants, taking into account relative size each contribution.
The profit received by the partners as a result of their joint activities is distributed in proportion to the value of the partners' contributions to the common cause, unless otherwise provided by the contract or other agreement of the partners. The agreement may introduce additional criteria for the distribution of profits (for example, an additional part of the profit for the successful conduct of common affairs).
A simple partnership agreement is terminated upon expiration of the term or upon achievement of the purpose for which it is concluded, as well as due to other circumstances (the declaration of one of the partners as bankrupt, the withdrawal of one of the participants from the partnership, the allocation of a partner’s share at the request of his creditor, in cases where the contract or subsequent agreement does not provide for the preservation of the contract in relations between the remaining partners).
Upon termination of the contract, it becomes necessary to resolve two issues: a) liability for general obligations existing to third parties; b) on the division of common property or the return of property transferred to common use.
As for liability for general obligations, from the moment of termination of a simple partnership agreement, its participants bear joint liability for unfulfilled general obligations in relation to third parties. In the event that a simple partnership agreement was not terminated as a result of a statement by any of the participants to refuse further participation in it or termination of the agreement at the request of one of the partners, the person whose participation in the agreement was terminated is liable to third parties for general obligations, arising during the period of its participation in the agreement, as if it remained a party to the simple partnership agreement.
The division of common property is carried out according to the rules established by the Civil Code of the Russian Federation for the division of shared property. In this case, a partner who has contributed an individually defined thing to the common property has the right, upon termination of a simple partnership agreement, to demand in court the return of this thing to him, provided that the interests of the other partners and creditors are respected. Property transferred for common use is returned to the participant who transferred it without compensation for wear and tear (unless there is an agreement between the participants on compensation).
A simple partnership agreement may provide that its existence is not disclosed to third parties (unspoken partnership). In relations with third parties, each of the participants in a private partnership is liable with all his property for transactions that he concluded on his own behalf in the common interests of his partners. In relations between partners, obligations arising in the course of their joint activities are considered general.
At present, the form of entrepreneurial activity in question has not yet found wide distribution in Russian Federation. The formation of simple partnerships, apparently, is advisable primarily in the form of consortia created for a certain period in the interests of implementing large projects.
Financial and industrial groups (see chapter 4) by their legal status, as a rule, they also represent simple partnerships created on the basis of an agreement of participants. They form their common property through contributions from participants and bear joint liability for common obligations. Only financial and industrial groups consisting exclusively of main (parent) and subsidiary companies do not constitute a simple partnership. However, if these companies are linked by a special management agreement, then a type of simple partnership occurs.