GEB 3373 Lecture Notes - Lecture 49: Transfer Pricing, Investment

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Relative safeness of alliance: conduct due diligence. > assess success of potential part(cid:374)er"s pre(cid:448)ious allia(cid:374)(cid:272)es. Special form of jv where private firm and government partner. Government may control resource it wants developed and enlists firm w/expertise in that resource. Government may not allow wholly owned foreign operations. > if fir(cid:373) (cid:272)a(cid:374)"t find suitable local partner, it may invite government, or government may request ownership share. > government support (cid:272)a(cid:374) restri(cid:272)t (cid:272)o(cid:373)petitio(cid:374) to jv"s (cid:271)e(cid:374)efit. > government change may mean loss of investment, asset seizure, operations shutdown. Firms need to understand fully govt. expectations/commitments. Part(cid:374)ers" (cid:373)a(cid:374)agers pass i(cid:374)stru(cid:272)tio(cid:374)s to allia(cid:374)(cid:272)e"s (cid:373)a(cid:374)age(cid:373)e(cid:374)t. Alliance mgmt. has limited authority, defers to decisions of parent-firm managers. Requires much cooperation and near-perfect agreement between partners. Management simplified b/c dominant partner can set agenda, break ties, overrule partner if necessary. May create conflict, but keeps alliance from paralysis, which can occur if = partners (cid:272)a(cid:374)"t agree o(cid:374) de(cid:272)isio(cid:374) Execs may be transferred from parents or hired new.

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