When A Firm Enters Into A Joint Venture Agreement With A Local Firm

Posted on Friday, April 16th, 2021 at 4:26 am

Original document, joint ventures and partnership, © Crown Copyright 2009 Source: Business Link UK (now GOV.UK/Business) Adapted for Quebec by Info Entrepreneur Answer: Contract manufacturing can take three forms: 1. Manufacturing of certain finished product parts: For motor vehicles or wallets or shoes, foreign parts are manufactured from abroad, which will then be used for the manufacture of finished products. 2. Assembly of components in finished products: for electronic objects, different elements are assembled in the country where they are intended to be sold. 3. Complete manufacturing of products: In some cases, products such as clothing are granted for full manufacture and products are sold under the brand name of foreign companies. A joint venture can also be very flexible. For example, a joint venture may have a limited lifespan and cover only part of its business, limiting the obligation for both parties and the company`s commitment. Answer: Internal trade takes place between the geographical boundaries of a nation, while international trade takes place between different nations. 1. In each nation`s trade, the volume of its domestic trade will be more than that of foreign trade. Domestic trade accounts for about 95% of a country`s total trade volume, while foreign trade accounts for only about 5% of a country`s total trade volume.

2. Although domestic and international trade are based on the principle of specialisation or division of labour, regional specialization within a country leads to internal or inter-regional trade, while country-by-country specialization leads to international trade. 3. In the case of domestic trade, there is a great deal of room for manoeuvre in the use of supply and demand forces. But in the case of foreign trade, there is not much room for manoeuvre for the full functioning of supply and demand forces. 4. The number of trade documents required for self-negotiation is less than that required for foreign trade. 5. Domestic trade is subject to the regulations and laws of a single country, while foreign trade is subject to rules and laws of two or more countries.

6. Domestic trade is generally free of restrictions, while foreign trade is subject to a number of restrictions. 7. Domestic transport costs are much lower than those of foreign trade. 8. The interval between the shipping of the goods by the seller and the receipt of them by the buyer in the sale is not much. Products are more exposed to foreign trade than within the country. 10. Because products are more exposed to risks in foreign trade, goods are generally insured against risks in the case of the international trader.

11. Domestic trade includes only a country`s currency, while foreign trade includes the currencies of two or more countries. All partner companies have some degree of control over this project. The agreement on equity between independent companies leads to the creation of a new organizational entity.

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