PMA for LAGB Law Coursework Research Coursework Paper

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MODULE TITLE: Legal Aspects of Global Business
MODULE DATES: 5th Oct-9th Oct
STUDENT ID NUMBER (name not required):
Poly U: 19109468g,
WMG: u1944540
Table of Contents
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Cover Page  PAGEREF _Toc54875880 \h
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Analysis of International Joint Venture  PAGEREF _Toc54875881 \h
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Case Study of CarCO & SCarz IJV  PAGEREF _Toc54875882 \h
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International Joint Venture Benefits  PAGEREF _Toc54875883 \h
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International Joint Venture Risks  PAGEREF _Toc54875884 \h
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Legal Aspects for International Joint Venture  PAGEREF _Toc54875885 \h
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Financial analysis of merged CarCo and SCarz  PAGEREF _Toc54875886 \h
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CarCo's acquisition path  PAGEREF _Toc54875887 \h
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Legal Risk  PAGEREF _Toc54875888 \h
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Additional Legal Risks  PAGEREF _Toc54875889 \h
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Commercial Risk  PAGEREF _Toc54875890 \h
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Steps to set up a new purchasing department  PAGEREF _Toc54875891 \h
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Corporate identity  PAGEREF _Toc54875892 \h
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Operational analysis  PAGEREF _Toc54875893 \h
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Legal Clause for the Merged CarCo and SCarz  PAGEREF _Toc54875894 \h
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Bibliography  PAGEREF _Toc54875895 \h
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Analysis of International Joint Venture
Case Study of CarCO & SCarz IJV
As a US-based vehicle manufacturer who wishes to expand into Asia and conduct an international Joint Venture with a Singapore-based car manufacturer, CarCo's sales cover most U.S., Central American, and certain countries in South America. Carco is finishing up with acquiring SCarz; its negotiation has progressed to an advanced level. CarCo is debating on whether to acquire Scarz 100% or just form a joint venture with Scarz.
International Joint Venture Benefits
Most companies are going for 51%, which is a magic number because it guarantees the majority and control of personnel, brand decisions, and investment choices. However, a study by Harvard College researcher Joel Bricker Ernst's partnerships with the top 150 companies by market capitalization (50 each in the U.S., Europe, and Japan), the sample came to the opposite conclusion: A 50-50 joint venture is more likely to succeed than one with a majority stake. A joint venture with 50% ownership has a 60% success rate, compared with a 31% success rate for a majority-owned joint venture. In the case of a joint venture, if the equity is not 50-50, usually both parties fail. 50-50 ownership is essential for another reason: it ensures that each partner is focused on the other's success, thereby building trust.
On the other hand, if ownership is not 50-50, first of all, one party will generally exert control and put its interests above the interest of the other party or above the interests of the joint venture itself. The party with a majority stake in the joint venture will often dominate decision-making, transfer surplus employees to joint ventures. When the company is undergoing cash flow problems, the other party will transfer the redundant employee to the headquarter. It's not always easy; a 51% stake certainly gives one party full legal control. But it doesn't mean that the party can buy the brains, spirit, initiative, or dedication of the other party's enterprise. Because the other side of the equation has no incentive to keep its promises, access to critical professional services, regulatory, legal, etc. can make a big difference in different environments, especially in a market where you don't know much.
In conclusion, like a harmonious marriage, a harmonious partnership can't always be an attempt to stay ahead of ownership of control. If either side wants to achieve the expected benefits, it will require effort, enthusiasm, and commitment. It emphasizes that gaining control through ownership of shares destroys the partnership and makes it impossible to have a successful partnership.
International Joint Venture Risks
Singapore doesn't have a big enough market for large scale cross border merged company to develop. Most of its domestic companies are seeking international financing, technology, and expertise. According to Hwang et al., several Singaporean AEC companies have formed ICJVs with partners in developing countries to conduct the project (Hwang Zhao Chin, 2015). Risk management is vital for IJVS with developing countries. If there is mismanagement or legal problems, developing countries can settle more than the developed countries. According to the Transnational Commercial and Consumer Law, the percentage of complainants that agree to withdraw their complaint after mutually reaching a solution is only slightly higher for L...