ISE EBook for Strategic Management of Technological Innovation by Schilling Melissa;

Author:Schilling, Melissa; [Melissa A. Schilling]
Language: eng
Format: epub
Publisher: McGraw-Hill US Higher Ed ISE
Published: 2020-06-08T00:00:00+00:00

Joint Ventures

Joint ventures are a particular type of strategic alliance that entails significant structure and commitment. While a strategic alliance can be any type of formal or informal relationship between two or more firms, a joint venture involves a significant equity investment from each partner and often results in establishment of a new separate entity. The capital and other resources to be committed by each partner are usually specified in carefully constructed contractual arrangements, as is the division of any profits earned by the venture.

For example, in April of 2018, Tencent Holdings (a Chinese multinational conglomerate that specializes in Internet-related services such as social media, music streaming, mobile games, and more) announced it was forming a joint venture which page 182Chinese state–owned Changan Automobile Company to develop Internet-connected autonomous driving technology that would utilize artificial intelligence. Tencent would invest 102 million yuan (about $16.2 million) for a 51 percent share of the venture, and Changan would invest 98 million yuan for the remaining 49 percent share. Changan had already completed a 2000 kilometer road test from Chongqing to Beijing, and said it had received clearance to start testing autonomous vehicles on public roads in the U.S. state of California.28

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