Joint Venturing 101
What is a joint venture and how do they work?
By Scott Allen The following article is an exclusive excerpt from Happy About Joint Venturing by Valerie Orsoni-Vauthey.
If you can't beat 'em, join 'em. Two heads are better than one. United we stand.
If you are a business owner who wants to significantly increase market reach, break down barriers to entry in your market, or simply generate skyrocketing revenues in a shorter amount of time, these old adages are becoming more and more relevant.
According to the Commonwealth Alliance Program (CAP), businesses anticipate strategic alliances accounted for 25% of all revenues in 2005, a total of 40 trillion dollars. This figure has been steadily growing over the past few years as more solopreneurs and Work At Home Parents (WAHPs) decide to unite to augment their odds of survival in a highly competitive global environment.
You are about to learn one of the most powerful tools I know of for being successful in today's competitive business atmosphere. I'm of course talking about Joint Ventures, or specifically, teaming up with another person, group of persons, or business entity for the purpose of expanding your business influence and creating a more powerful market presence.
Joint Ventures are in, and if you're not utilizing this strategic weapon, chances are your competition is, or will soon be, using this to their advantage.... possibly against you!
Our primary goal is to make you a successful joint venturer. This will happen if you are an informed entrepreneur. Thus, it is necessary for us to dive into the technical aspects of joint ventures. Specifically:
What is a joint venture?
How does it work?
Should I start a joint venture?
What are my chances of success?
What are the risks involved?
What are the legal implications of a joint venture?
From a merger in the sense that there is no transfer of ownership in the deal.
This partnership can happen between goliaths in an industry. Cingular, for instance, is a strategic alliance between SBS and Bellsouth. It can also occur between two small businesses that believe partnering will help them successfully fight their bigger competitors.
Companies with identical products and services can also join forces to penetrate markets they wouldn't or couldn't consider without investing tremendous resources. Furthermore, due to local regulations, some markets can only be penetrated via joint venturing with a local business.
In some cases, a large company can decide to form a joint venture with a smaller business in order to quickly acquire critical intellectual property, technology, or resources otherwise hard to obtain, even with plenty of cash at their disposal.
How does a joint venture work?
The process of partnering is a well-known, time-tested principle. The critical aspect of a joint venture does not lie in the process itself but in its execution. We all know what needs to be done: specifically, it is necessary to join forces. However, it is easy to overlook the "hows" and "whats" in the excitement of the moment.
We will look at the "hows" in our review of the Eight Critical Factors of Success. For the moment, let's keep in mind that all mergers, large or small, need to be planned in detail and executed following a strict plan in order to keep all the chances of success on your side.
The "whats" should be covered in a legal agreement that will carefully list which party brings which assets (tangible and intangible) to the joint venture, as well as the objective of this strategic alliance. Although joint venture legal agreement templates can readily be found on the Internet, I suggest you seek the appropriate legal advice when entering such a business relationship.
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Apple and I.B.M. End Multimedia Joint Venture
By LAWRENCE M. FISHER
Apple Computer Inc. and I.B.M. said today that they were closing one of their three joint ventures, Kaleida Labs Inc., which makes programming tools for multimedia software. Kaleida had never managed to dislodge the industry standard, Macromedia Inc.'s Director program, from its perch.
Kaleida had only 79 employees, some of whom will be offered positions at Apple and I.B.M., the companies said.
The demise of Kaleida raises questions about the survival of another of the companies' joint ventures, Taligent Inc., which was originally intended to create a new operating system, but which lowered its horizons and now provides software-development tools. The Hewlett-Packard Company is a third partner in Taligent, and its presence may increase the venture's chances of survival, though many analysts say they think Taligent's days are numbered.
The failure of Kaleida to bridge the cultures of two very different companies raises questions about the wisdom of any Apple merger with the International Business Machines Corporation. Such a deal has been much rumored.
Apple and I.B.M.'s ballyhooed 1991 alliance created three ventures. The only one that appears to be a success is Power PC, and even that is a qualified success.
Apple, I.B.M. and Motorola Inc. banded together to create a new microprocessor using advanced technology, and today that Power PC chip is used to power most new Macintosh computers. But I.B.M. and Motorola have yet to sell large volumes of computers using the chip, and the Intel Corporation's dominance of the microprocessor market remains unassailed.
Kaleida's intent was to create software, called Scriptx, that would allow multimedia programs to run on multiple types of players, so that developers could create titles independent of conflicting hardware concerns.
Although a number of large consumer electronics companies endorsed Scriptx, Kaleida was late delivering the program, and the multimedia market took off without it. Many developers partly skirt the compatibility issue by shipping hybrid CD-ROM disks that run on either the Macintosh or the Microsoft Corporation's Windows system.
"The products, such as they were, were too late and too little," said Richard Shaffer, publisher of Computer Letter. "It's just extremely difficult for companies to work together. Most alliances and joint ventures don't produce much more than the first press release."
Kaleida has produced Scriptx for its target audience of software developers, and has made the Kaleida media player, for playback only on computers and video game players. The media player was first shipped about a year ago, and updated versions are being completed now. Apple and I.B.M. said they planned to continue to develop products based on Scriptx's core technology. Apple will integrate Kaleida's programs with its software development tools business, which includes Hypercard, Quiktime and Quikdraw.
"When we really looked at what we had to do to make Scriptx successful, we realized we really had to spend more on authoring tools, not so much on marketing," David Nagel, Apple's senior vice president for worldwide research and development, said in a telephone interview.
Scriptx will go forward both in its original form and as a dynamic programming language for multimedia on the Internet, he said. "Since media-rich experiences on the Internet are what people are excited about, we think Scriptx can be very interesting in that space," he said.
Nat Goldhaber, the original chief executive of Kaleida, who left in 1993, said the company could have amounted to much more had Apple and I.B.M. given it true independence. The ties to the parent companies worked against Kaleida in signing licensees, and Mr. Goldhaber said his attempts to run it as an independent company only irritated Apple and I.B.M. management.
"As an independent company in which I.B.M. and Apple had an investment and contributed, but which could steer its own course and establish its own business practices, it made sense," he said. "As an independent development group whose products only benefited Apple and I.B.M., there was not sufficient internal motivation to complete things in a timely manner and behave like a start-up," he said.
Taligent appears to have suffered from similar problems, in that its products are late and have gathered relatively little support. The company has also had to contend with the recent departure of its chief executive, Joseph M. Guglielmi, a former I.B.M. executive who left to join Motorola, and the sudden death of his acting successor, Richard A. Guarino. But Steve Mills, general manager of I.B.M.'s software solutions division, said there were no plans to close Taligent.
"We're still very committed to Taligent," Mr. Mills said in a telephone interview. "It is a larger and more diverse technology. It has much more stand-alone capability than Scriptx," he said. Mr. Nagel said Apple, too, remained committed to Taligent as a separate entity.
The Kaleida announcement appeared to have little impact on either Apple's or I.B.M.'s stock. Apple shares closed today at $40.125, up 18.75 cents, in Nasdaq trading; I.B.M. shares closed at $95.125, down 50 cents, on the New York Stock Exchange.
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THE BASICS OF MANAGING AS A LEADER
How can a manager manage as a leader? Here are five critical factors to successfully managing as a leader:
1. KNOW YOURSELF
Leaders understand themselves and what they offer to the organization. Each leader has a distinctive, personal style, and each leader recognizes that he or she will make change in a way that reflects this style. Leaders who know themselves are able to assess themselves realistically and are comfortable talking about their limitations, as well as their strengths. Self-aware leaders know that feedback is essential to their development, and they eager to receive constructive criticism. (Golman)
Some managers at MIT may find themselves in a management position because they have been very successful as an individual contributor to a team. In some of these cases, they may not have stepped back and looked at their own strengths and areas for development as a manager and leader.
2. KNOW THE ORGANIZATION
A leader's way of leading should be flexible and adaptable to the context and culture of the organization. A single, constant style of leadership would not be effective in all organizations: different organizations require different approaches to leadership.
At MIT, your organization could be the Institute-wide organization, your specific department, or your team within your department. Consequently, there are numerous sub-cultures at MIT within the bigger, Institute-wide culture. Effective managers and leaders understand the context and culture of the different organizations within the larger organization. They then use the strengths of the organizational culture in their efforts to implement change.
To understand an organization’s culture, think about the following:
• How do things truly get done in the organization?
• Who have been successful leaders of the organization in the past?
• Why were they successful?
• What has the organization been successful for in the past?
• If you were to ask someone who has worked in the organization for a long time about why things are the way they are, what would he or she say?
Answering these questions should give you some insight into the underlying assumptions and values that drive your organization’s culture.
3. BUILD RELATIONSHIPS
Managers who lead effectively pay attention to the interpersonal dimensions of their role as manager and as leader. As a manager, they coach their employees to plan, set goals, and monitor performance (to learn more about coaching, see our article "What is Coaching?"). As a leader, they collaborate and influence people at all levels of the organization, they communicate assertively and effectively across the organization, and they are empathetic to others, regardless of position or authority.
People who effectively build relationships often weave the following communication techniques into their everyday conversations:
They ask others questions to learn more about what they really feel or believe (inquiring before advocating)
They repeat others’ comments as they hear them without adding their own ideas (allowing the other person to feel as though she or he was heard)
They understand another person’s point of view from that person’s perspective, not from his or her own perspective
It is critically important that managers who are leaders are able to build credible, trusting relationships with people in their own group and with others across the organization. Because of the complex range of emotions associated with change (fear, resistance, denial), managers who are leaders must be credible and trusted by the people they manage and lead if they are to be successful in leading change
4. CREATE VISION
Creating a vision means that a person can image the future and literally "see" what the future could look like. someone who creates vision can see opportunities for change, is able to think beyond obstacles, and can recognize what is best for the organization, even if obstacles and challenges to this vision exist in the present situation.
Managers who are leaders may have a vision about how the work in their area could be organized in order to improve efficiencies, or they may see an opportunity to move into a new area or create a new product in the interest of meeting the organization’s strategic goals. creating vision requires a certain amount of creativity, thinking out-of-the-box, and freedom to explore. sometimes managers at mit who are caught in the day-to-day operations of their group may feel too busy to generate the creativity necessary for a vision. stepping back from the day-to-day responsibilities and reflecting on the big picture can help managers have some of the perspective to create a vision. holding a retreat at an off-site location can provide the necessary distance from the day-to-day work to have the mental energy to create vision.
Tips to keep in mind about creating a vision:
A vision taps into embedded concerns and needs.
A vision asserts what you and your colleagues want to create.
A vision is something worth going for.
A vision provides meaning to the work you and your colleagues do.
By definition, a vision is a little cloudy and grand.
A vision is simple.
A vision provides a starting place from which to get to more and more levels of specificity.
5. MANAGE THE DAY-TO-DAY RELATIONSHIPS AND OPERATIONS OF YOUR TEAM.
The previous four factors, which are critical to success in managing as a leader, are incomplete without a fifth essential factor: good day-to-day management practices. Managers who lead others effectively also exercise the basics of good management practice (coaching, delegating, planning, goal setting, motivating employees) on a day-to-day basis. Consequently, the smooth, efficient day-to-day operation of their group allows them to also be effective leaders. http://hrweb.mit.edu/learning-development/learning-topics/leading/articles/basics
Basics of management», «Management styles and qualities». American and Japanese work management Тема 7. «Типы коммерческих организаций How to start a business Company structure».
Mergers and Acquisitions», «Joint Ventures». Mergers and Acquisitions», «Joint Ventures».
РАЗДЕЛ 4 «МАРКЕТИНГ»
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Define Money Market & Its Components
by Kenneth Hamlett, Demand Media
Money market funds strive to keep their net-asset value at $1.00.
A money market fund is essentially a mutual fund that invests in low-risk securities. However, it's important not to get money market funds confused with money market deposit accounts. The FDIC insures money market deposit accounts but not money market funds. The main components of a money market fund are the quality of its investments and its liquidity, investment diversity and investment length. Money market funds strive to keep their net-asset value at $1.00 per share with a fluctuating yield.
By law, money market funds must invest in low-risk securities. This translates into high-credit rated securities. For example, money market funds typically invest in government securities, CDs and commercial paper of first tier securities. Additionally, 97 percent of a money market fund’s assets must get invested in these first tier securities. In most cases these securities must receive top ratings from two nationally-recognized statistical rating organizations such as Moody’s, Standard and Poor’s or Dominion Bond Rating Service Limited.
Money market funds must maintain high levels of liquidity. In order to do that, a certain percentage of their assets must remain in cash, U.S. Treasuries, other government securities, or securities that mature and can get cashed out in one to five business days. All money market funds must maintain 30 percent of their assets in investments that can be made liquid within five business days; or in investments that take 60 days or less to mature if they are government securities. In addition, if a fund is taxable it must maintain 10 percent of its assets in investments it can make liquid on a daily basis. Now that’s some serious pressure.
Money market funds cannot put too many eggs in one basket. Federal regulations require that a money market fund have no more than 5 percent of its assets tied up in any single issuer.
Like most things, that rule gets bent when it comes to the federal government. Exceptions exist for some government agencies and other securities. Also, if a security falls into the second tier category of investments, a money market fund can only invest 0.5 percent of its total assets with that security’s company.
By nature, money market funds invest in short-term securities products. A money market fund cannot invest in a security that has more than 397 days left to mature. Plus, there’s a weighted-average maturity scale that takes into account the average maturity of all of the portfolio’s securities, weighted by each security’s percentage of net assets. When calculated, the weighted average maturity can’t surpass either 60 or 120 days, depending on the investment.
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Marketing – Art or Science?
Is marketing an art or a science? The answer is yes. Marketing is both - an art and a science. Enjoy this point and counter point about the art and science of marketing. Use the strengths of both arguments to better understand and improve your marketing.
Marketing is a science because marketing is about understanding and influencing behaviors. Psychology, the science of behaviors, studies how people react to certain stimuli in predictable ways. This is similar to Newton's' third law - cause and effect. For every marketing action there is a reaction. The science is in anticipating the reactions to your actions.
Marketing is an art because marketing is about appreciating the nuances of human behaviors. Beauty is in the eye of the beholder. Beauty is art.
Marketing is a science because marketing is about measuring and analyzing the numbers. How many prospects do you reach? How many people read your message? How many do you convert to buyers? How much do they spend? How many buy again? These are mathematical questions and answers and important to the success of your marketing. Math and accounting are important sciences to your business.
Marketing is art because marketing is about creating a demand for your product. Some of that demand is immediate and some of it is in the future. You can try to use science to predict the future part but you might pick a number based on art. There is always an unknown aspect that we attribute to art.
Marketing is a science because the most common question is "How much money should I spend on marketing?" The business owner and the accountants want the answer to this question. It's a good question but the more important question is, "What return can you expect from your marketing investment?" That's an important question and it is measurable like science.
Marketing is an art because there is the issue of branding which is difficult to measure. To generate a good return on your marketing investment requires a creative approach. That means that you need to apply the art of marketing. That is difficult to measure but it is necessary.
Of course the argument of science versus art could go on. Is it art? Is it science?
I believe that many marketers try to portray marketing as art when they can't measure their results. Hence they give up responsibility for their marketing programs. They suggest that marketing is all chance. Many self-declared branding experts talk about the art of branding and refuse to face the science of measurement. Don't be fooled by that hocus pocus.
I believe that marketing is a science that should draw upon the art. Never let art dictate the direction of your marketing. Use science to determine major decisions and use the art for the nuances.
Is marketing a science or art? I believe that it is both art and science. Most importantly the science should lead and measure; the art should inspire and create.
That is the art and science of marketing.
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