Critically analyse the situation facing Lucky MT, drawing on your Essay

Critically analyse the situation facing Lucky MT, drawing on your learning across the entire module. What recommendations would - Essay Example At the same time, one of the owner partners is not comfortable with the joint venture while the other is very comfortable. These issues may be related to the formation of the joint venture and the subsequent launch. It seems that a lot of issues were not looked at well including Lack of proper organization, lack of good launch and operation strategy, lack of a good exit strategy, diverging interests in the joint venture and the increasing competition from other companies in the same field and in other regions. Lucky MT needs to revise its strategy and come up with a better organizational structure, improved outsourcing strategies, international cultural management skills and drafting policies and regulations to be followed by the partner companies, the management of the joint venture and the employees. Addressing these issues can assist in encouraging common goals between the partners which is critical in withstanding the current storm of issues and to get more customers to increase profitability and encourage better growth. This information also provides knowledge to other companies that may be thinking on the lines of establishing joint ventures in the future. Lucky MT overlooked many things which are discussed below and recommendations provided. Nature of Joint Venture Business While Lucky MT found it necessary to form joint venture, which is beneficial to the company in sharing capital expenditures and risks, the company did not do well in this department. Looking at the company, it was initially founded by two companies. Later, the two companies decided that the joint venture, Lucky MT gets to a joint venture with another company in Singapore to participate in the international market better and more easily while getting a competitive edge. However, the partners in the joint venture overlooked the consequences of getting into joint ventures with international companies. As the partners confirm, the involvement in many joint ventures decreased the profit sh are of each partner involved (Lucky MT document Pages 3). When looking to get into joint ventures, the partners should look for businesses that can generate enough profits for all the partners involved. However, this was not the case for the Lucky MT. The partners chose the Electronic Manufacturing Industry which is quite profitable. However, this industry is capital intensive and also very expensive to maintain. Basing on that the company is relatively small; it would be a challenge to maintain the business. At the same time, the returns from the industry were quite small compared with the investment made in the Joint Venture in Singapore. The returns of the company were 2.5 million dollars in the year 2000. Being an international joint venture with several partners, this is little profit and each of the partners gets a little share of the profit. An international venture would be expected to generate good profits for each partner to get good profits. However, a joint venture gener ating good profits has been just a pipe dream. According to Dennis Campbell and Antonida Netzer (2009), joint ventures take a long time before they become profitable. In addition, they also take longer to break even which may be a challenge to the partners of the venture. Top of Form Bottom of Form This discourages many of the joint venture partners as they expect profits when they get involved in the ventures. It is no wonder that Dennis