Why Big Business Firms Form Joint Ventures?
Nestle SA and Colgate-Palmolive formed a joint venture to develop and sell candy that can produce plague and clean teeth. IBM and Lenovo Group also formed a joint venture. IBM sold its PC Division to the China-based company that would make the latter the third world’s largest PC maker. Skype Software of Denmark and Tom Online of China developed a joint venture to distribute a simplified version of Skype’s VOIP. Is joint ventures business hype or a way to achieve business strategies? Here are the reasons why many big business firms form joint ventures: 1. To develop new products – Examples of functional confectionary products are gum and candy that have health and beauty benefits. Sales of these products are growing for about 6 percent each year which is twice the growth rate of standard gum and candy. Nestle SA had no functional confectionary products prior to its joint venture with Colgate-Palmolive. Cadbury Schweppes, PLC’s Adams, and Wm. Wrigley Jr. dominate the functional confectio
