Partner Selection for International Joint Ventures (IJV)

Partner Selection for International Joint Ventures (IJV) INTERNATIONAL JOINT VENTURES Partner selection is recognized as being very important to the success of any collaboration. Taking into consideration the lessons from the Collaboration Exercise, the course material and any publicly available information available to you, critically discuss the relevant issues concerned with partner selection for collaboration, specifically in the context of an International Joint Venture company. The questions provided below provide some guidance on the issues you could cover: What are the main characteristics to look for in a good collaborative partner? What would your selection criteria include? Consider also the strategic, political and tactical implications of your choice (30%) What factors are important in determining whether or not you and your partner are a good match, i.e., compatibility of culture? Again, what would your selection criteria include? (30%) What could you and your partner do to create good conditions for a partnership? (40%) Length: All scripts are subject to a maximum word count of 4000 +/- 10%, excluding references, tables of contents and appendices. The final word count should be included at the end of the script. COMPLETION DATE: To be submitted electronically using the appropriate web-form available from http://www2.warwick.ac.uk/fac/sci/wmg/ftmsc/postmodulework/submissions/ and following the guidelines provided in your handbook BEFORE 09:00 on 17/01/11 PLEASE NOTE PMW received after 09:00 will be stamped as having arrived on the next working day. Post Module Work which does not reach WMG by the due date will be considered to be late. Penalties for lateness may be applied at the rate of 3 percentage points per University working day after the due date, up to a maximum of 14 days late. After this period the work may be counted as a non-submission. Complete your assignment from here (heading styles have been set up to assist you in this work) (Delete the instructions in this font before you save and submit your work): MODULE TITLE Table of Contents International Join Venture 2 Environmental characteristics 3 Partner Compatibility Evaluation 5 Creating good condition for partnership 13 Conclusion 16 References 17 Enter a page break here and between each question Partner selection is recognized as being very important to the success of any collaboration. Taking into consideration the lessons from the Collaboration Exercise, the course material and any publicly available information available to you, critically discuss the relevant issues concerned with partner selection for collaboration, specifically in the context of an International Joint Venture company. The questions provided below provide some guidance on the issues you could cover: What are the main characteristics to look for in a good collaborative partner? What would your selection criteria include? Consider also the strategic, political and tactical implications of your choice (30%) What factors are important in determining whether or not you and your partner are a good match, i.e., compatibility of culture? Again, what would your selection criteria include? (30%) What could you and your partner do to create good conditions for a partnership? (40%) International Join Venture International joint venture between two or more companies has benefits of more resources and knowledge share as well as reward and risk share. Reasons that companies create joint venture could be initiated by new product development, opportunity to access wider marketing or expanding the company with at least one company headquartered outside country of operation (host country). The immediate benefits of joint ventures partnerships are access to a wider range of resources with complimentary set of skillsets and expertise, access to extensive market domain and ability to utilise a broader range of technologies. International joint venture partnership is one of the integral factors to grow and develop economics and the most beneficial approach is by engaging with and utilising local business with strong market connections and existing established business networks. Environmental characteristics Government and Politics One of the most important criteria in choosing an international joint venture partner is the environment where joint venture will operate in, as this can have direct effect on the performance of both parties. Host countrys political atmosphere and government policies are key factors to consider when verifying the suitability of the environment; any pressure could directly or indirectly restrict the foreign partners involvement and activities (Blodgett, 1991). According to Ozorhon et al. (2007) host governments unstable policies and regulations, regular changes in laws and restrictions on repatriations and imports, jeopardise the effectiveness of joint venture partnership. In authors opinion host countrys political procedures that disable effective IJV partnership needs to be identified prior to any attempt to start a joint venture. An example of a political issue effecting IJV is political mismatch and disagreements between foreign partners government and the host partners government. This will hugely impact business agreements from taking place even if partners skillsets, organizational policies and objectives match and work very well together. Stable economic situation, government policies and political relationships are crucial to a successful business partnership; the foreign partner needs to find an adequate environment before deciding on finding a matching partner, evaluating economic, political and financial aspects of the environment. Case study This case study will look at current situation of Irans International joint ventures and influence of Western countries political relationship with Iran on business partnership with other countries. The Current UN and European sanctions on Iran over claims that Iran is building nuclear weapons have affected new joint ventures as well as the ones that have been in place for many years. One example is Rhum North sea gas field in Scotland owned by BP (50%) and the Iranian Oil Company (50%), the joint venture started since 1970s. New European sanctions have forced BP to suspend this engagement and stop production in Rhum North Sea (BP, 2010). This demonstrates politics contention between countries, affecting joint ventures and ending related agreements with immediate effect, causing financial loss for both partners. Other countries that are in agreement with the United Nations regulations and countries with good political and economic relation and dependencies with the USA and the West could also consider limiting and ending their joint ventures with Iranian companies. This is to avoid any breaking the United Nation regulation as well as avoidance to jeopardising their relationship and dependency to western countries. A stable host government creates a suitable environment for IJV partners; this has long term positive impact on the courtiers economic and immediate positive effect on the partner companies, allowing the parties to concentrate on the inside organisational progress and improvements. Economic Environment A partners country economic situation can affect the business environment and performance, having stable economic elements provides the foreign partner a constant and secure investment climate (Ozorhon et al. (2007). In authors opinion economic climate could affect IJV partnership viability, economic fluctuation, foreign exchange rates and inflation, with direct impact on the partner selection process. Businesses start joint ventures in other countries considering economic perspectives that fit their needs. The host countrys currency compared to foreign countrys currency, gives an opportunity to investors from foreign countries to benefit from cheap investments (Low cost of capitals) and increased wealth position. Currency appreciation makes higher material and manufacturing cost in foreign country hence foreign partner moves the production to host country to benefit from lower costs and gain more opportunity to compete and be a leader in the related market. Market Power The market power is focused on how businesses can get stronger and develop their market domain through international partnership (Child Faulkner, 1998). In authors opinion, successful companies with high position in the existing local market could take advantages of other countries market, enter international sale and extend their marketplace by starting partnership with other successful company in different countries. Also companies with advanced technologies and skillsets could start a joint venture partnership with small companies in other developing country to benefit from the raw market and extend their domain. Dominant market network, using partnership advantageous creates an International joint venture with mutual benefits to partners, increases growth opportunities and market power for both parties. Business market power is an essential deciding factor in selecting a partner. It is also critical to review the business and economic history of the environment, current climate and future predictions. The regional and national business performance, quality of life and people expenditure on similar product and services help to indicate the partners economic environment suitability. Development and management of international joint ventures in different environments creates their own challenges, above all cultural differences between two partners from different nations adds additional complexity. Other related issues and challenges are language barriers and consequence communication issues, management relationship conflicts, unclear objectives, different objectives, incompatible expertise / facilities, lack of partner support and involvement. Partner Compatibility Evaluation Before making any decision on selecting a joint venture partner, extensive research and detailed study are required to be carried out to identify the partners business prospects, objectives and the environmental and organisational characteristics. SWOT (strengths, weaknesses, opportunities and threats) analysis is very beneficial and could be utilised to identify the potential partners weaknesses and strength and how they match the companys requirements. This would help to establish if two businesses complement each other (Barnes, 2010). During the International join venture module and the team exercises, author gathered a list of important criteria that are crucial in the partner selection process: Past reputation and positive track record of collaboration, good brand, culture (national and corporate culture), Organisation size, mutual benefit potentials, compatibility of CEOs and the senior management team, ability to work together in operation levels, government laws and regulations, strategic clarity and compatibility, management style, subject matter knowledge and skills, experience in the related market and assets (Barnes, 2010). In this assignment author is going to analyse and explore Cultural differences between partners and Compatible management style. Culture Why culture is an important factor? There should be a cultural fit between companies, for example it is difficult to match a bureaucratic culture to non-bureaucratic culture, as resources are not used to obey rigid rules (e.g. managers stamp or signature to process tasks). International joint venture partnership cannot avoid cultural differences; there will always be a case of hybrid structures. According to Swierczek (1994) majority of joint ventures partnership failures are caused by cultural related issues and mismatches. A study of 110 joint ventures between America and Asia shows 50% of failure is mostly affected by non-complementary cultures and incompatibilities. Partners culture influences commonly known assumptions, unrecorded rules and regulations and common understandings. It is important to evaluate the potential impact of the partnerships effects on the general skills, quality, resources and the company systems and organisational structure. Due to the cultural differences and the need of cooperation, there would be a need to compromise; however the effect of this needs to be analysed and the impact carefully evaluated (Swierczek, 1994). One important factor that determines the success rate of an international joint venture partnership is culture compatibility; without this partners cannot work together and conflict can occur. Compatible cultures can create same understanding and harmony between the partners. To understand cultures and the factors that could impact the possibility of their compatibility, author has evaluated different angles and viewpoints of culture. According to Hofstede (1984) core aspects of culture are: High power distance: Communication with higher positioned members and senior managers has formal process with hierarchy organisational system. Low power distance: Members feel equal, included in decision-makings and communication with senior members and environment is more relaxed and informal. Individualism: Contributor is focused on self-success, own benefits and objectives. Collectivism: Contributor has more interest in team success and group interest High uncertainty avoidance: Keeping away from risk and getting out of conflicts Low uncertainty avoidance: Comfortable with approaching risks and dealing with disagreement Femininity: In Feminine cultures values and approaches are modest, emotional and considerate. Masculinity: This culture is oriented by Competiveness, assertiveness and achievements In authors opinion it is evident that cultures with different values can face conflicts and disagreements, different nations can have different understandings and interpretations and culture as a foundation affects the conflict management style. In multicultural joint ventures, partners communication style will differ and could clash with each other; this could be very frustrating and create unsuccessful results. Different culture means different languages, different outlook, beliefs and problem solving approaches. According to Swierczek (1994) Asian culture generally avoids conflicts and when it occurs they seek help from senior members to suggest solutions but in European cultures there is less respect for hierarchy and when confrontation occurs, the negatives would be pointed out directly. In authors personal experience from Asian and European cultures, people with different cultures have dissimilar attitudes in business, partly because of the educational and discipline methods, that differs in cultural backgrounds. Partnership between two firms could be successful if cultural differences are realised and analysed in early stages. This would be by identifying the potential problems and conflicts with proposed solutions enabling partners to benefit from constructive aspects of multicultural approach. According to Swierczek (1994) building a correct and effective organisational culture and considering the involved cultures could reduce the possible conflicts. To make conflict management more effective two methods are introduced: 1. Compromise style To prevent any win-lose outcome, participants would negotiate and agree to give up their benefits partly so their partner would gain mutual benefits as well. Also when same objectives cannot be reached or more than one agreement is on the table, compromising needs to take place. 2. Collaborative style All the participants need to get involved and identify roots of conflicts and assess the possible outcomes and damages then introduce solutions agreed by everyone (Swierczek, 1994) According to Al-Khalifa and Peterson (1999) in many failed international joint venture (IJV) cases, manufacturing process doesnt last very long and this is caused by the lack of understanding of the local cultural, political and economic environment. Cultures need to fit between the organisations, a lot of international joint ventures collapse because of cultural misunderstanding and differences; it is useful to research the local market first before entering the collaboration. An example of cultural difference is looked at by Lynn (2002) between Japanese and American companies, where Americans had the impression that Japanese are efficient and hardworking but were disappointed when saw different results after starting the international joint venture in America. In Japaneses view deadlines werent as important as it was for Americans, Japanese were more concentrated on what they want to achieve regardless of time but Americans aimed to finish the work by the deadline however possible. This was a big problem for Americans when they used one of Japanese suppliers and received the order six months late. In authors opinion the definition of hardworking and efficiency in different cultures differs where Japanese seem to be aiming for the best result and improving the quality and less concerned about the deadlines. This could be very frustrating to opposite partner with different attitude. It is important that companies find a partner that are compatible and have the same perspective and understanding. Culture awareness and a full initial analysis phase, to gather the required information, helps partners to evaluate the possibility of working together successfully and provide the bases so that parties design a framework and set a realistic plan that would work for both cultures. Partner complementary skill According to Zahra and Elhagrasey, (1994) majority of International joint venture failures are caused by selecting a wrong partner. Partner selection by their brand popularity or reputation is not enough and further research is needed to determine if the partners are compatible If Partners skills and strength matches or compliments the business requirements, the partnership objectives could be successfully met; these requirements could be market, skills or resource access related. The range of skills that each partner can contribute to a partnership varies. A purpose of a partnership would be to fulfill the business requirements where the necessary skillsets such as technical skills, market knowledge skills, production skills, management skills or resource access skills are not at a sufficient level. This could also be due to the associated costs or time limitations challenges with producing these skills locally / internally. When two partners skill sets complement each other, partnership can work well together, however if two partners have similar or identical skill, disagreements and competition could occur. Organisations can often learn from the skills and experiences offered by the partner in an international joint venture to enhance their offerings and abilities. This could reduce the needs of future partnerships. Management Style It is challenging to manage International joint venture (IJV) companies that have been created by two or more parent companies. These companies have different structures, goals, management style and organisational cultures. People management conflicts become evident when partners discuss how the organisation will be managed and who will be in charge. According to Matthews (1999) the problems with international joint venture that require control and structured management are: Different background and cultures Business geographical locations Inevitable IJV short lifetime Joint business political issues The opportunities where management style could have a critical impact include: Combination of technical and business skills Access to IJV parents staff Organizational learning According to Matthews (1999), developing ethnocentric mindset in organisations tends to concentrate on parent companys management methods, be narrow-minded and inflexible. Traditional IJVs used to concentrate on parent companys management procedures and problem solving process which mostly ended up unsuccessful but some chose to approach global mindset and try to understand different cultures, agree to diversity and apply different management approaches where needed. Multiple IJVs management style Within multiple IJVs it is gathered that decentralised approach is more successful than centralised approach. After forming IJVs in different locations and setting up the operations successfully each overseas IJV would plan and react to local market demand. This would improve efficiency and make them able to respond to local customers immediately. According to (Yan and Duan, 2004) matching partners need to have compatible management culture and strategy, consensus on strategies, control and operations management. In authors opinion compatible management style is about managers with efficient communication and skills in creating a balanced relationship between partners. Management control and strategy is the key to be agreed by both parties to prevent any conflicts during the IJV and management control to prevent problems such as rush growth, ineffective use of resources and autonomous goals. Within this process partners need to have a structured management system and build an independent organisational culture. According to Gil and Butler (2003) it is easier to work with an international partner when managers have international business experience and cultural knowledge, this awareness enables them to adapt to environment, have positive attitude, respect multicultural environment and identify business partners capabilities Therefore having multicultural market knowledge can create an opportunity for both partners to understand and respect cultures, agreeing on what is best for joint partnership. According to Gil and Butler (2003) the stability of the relationship depends on trust, conflict and dependenceÂÂ  influenced by management skills affecting IJV performance. Some of the important skills in managing IJV are: Negotiation skills: Compromise, exchange ideas and make decisions at different levels e.g. Engineers and Stakeholders Management Political skills: Negotiate and communicate with government members involved in IJV Diplomacy: Dealing with conflicts and resistance within the partner relationship Inter-partner skills: Managing partnership, communication, expectations and setting objectives Influential skills: Influence and motivate team members Managing ambiguity: Bringing objectives and vision as close as possible. In authors opinion in hybrid IJV organisations, it is difficult to avoid conflicts and control system with openness management style. First steps in IJV early stages are: To identify problems and related solutions agreed by everyone To plan and ensure that the management strategy matches the IJV environment Flexible management approach to adopt as changes happen Balanced relationship creates harmony and trust, successfulÂÂ  managementÂÂ  of an international joint venture mainly depends on a balanced partnership which is based on trust and shared ownership, where parties communicate effectively and clearly to help efficient move towards common goals and clear objectives. At the same time extra cautious needs to be taken when dealing with sensitiveÂÂ  culturalÂÂ  andÂÂ  regionalÂÂ  issues, withÂÂ  a certainÂÂ  degreeÂÂ  ofÂÂ  diplomacy, people andÂÂ  languageÂÂ  skills. Creating good condition for partnership Prior to start of any engagement when forming a joint venture partnership, it is essential for both parties to setup an agreement clearly defining expectations and scope. This will form a clear understanding between partners and helps with effectiveness of communications between parties (Barnes, 2010). In authors opinion to increase the chances of relationship survivor it is important to be open about every aspect of the business from beginning in particularly about financial matters to gain the partners trust. Agreements on goals, responsibilities and performance measurements (KPI) in early stages could indicate any problems and warnings, which could be resolved and prevented in early stages. In the meantime flexible relationship and atmosphere is essential to allow freedom of speech and involvement in suggesting improvements or even change of original objectives. Any partnership would encounter problems and disagreements, however looking at problems positively and promoting an attitude to create situations where win-win approach (Barnes, 2010) is applied is the key for creating a good condition for a successful partnership. There are a number of elements that would significantly impact the condition of an international joint venture experience and environments: Invest time and effort to get to know the partner In an international joint venture partnership it is important for the parties to take the time to get to know each others organisational structure, cultural habits and methods of work. Clear objectives Setting clear objectives and goals prior to any engagements is essential to prevent any ambiguity and conflicts. Management style IJV complex environment could create conflict and ambiguity between partners, compatible management skills could create balanced relationship. Roles and responsibility definition and assignment In a complex joint venture partnership with a large number of unknowns and a mixture of cultures, habits, structures and skillsets, roles and responsibilities ought to be defined clearly to avoid disappointment and ensure effective partnership condition. Expectation management Open and honest communications from start of the business to the end is essential, people involved need to understand what will be achieved and when this will be achieved. Everyone needs to understand the objectives and progress of them. Misunderstood or unrealistic expectations can make a successful process ending as a failure. Create Trust When an environment is stabilised and partners have agreed on compatible goals with set mutual benefits, both parties need to work on gaining each others trust to enable smooth process avoiding unnecessary red tapes to maximise efficiency and workforce effectiveness. Risk forecast, evaluation and prevention It is important for companies in a joint venture partnership, to identify and evaluate the risks related to the partnership program and the associated impacts. Identifying problems and risk evaluation in early stages would prevent any unexpected surprises during the process. Also this would give an opportunity toÂÂ  analyse issues and find solutions. Following are examples of potential risks with IJV partnership: Language barriers Multinational partnership involves different languages; a solution needs to be applied to overcome language barriers. Full reliance on interpreters and translators could introduce additional risks where individuals do not have the required technical and related business experiences. It is highly advantageous if the employee involved with the business strategy, have related knowledge, background as well as being bilingual. Culture Different cultures represent unknowns and risks. Respecting multicultural environment and having awareness could prevent future conflicts, create opportunities to utilise multinational benefits and minimize the level of disagreements between parties. Politics Government laws and regulations vary in different countries. Time need to be invested to fully understand the local policies where the venture is based. Organisational strategies Organisational strategies mismatch between companies could directly or indirectly affect the objectives. These inconsistencies are required to be identified and highlighted to be considered during the planning phase to avoid potential future issues. Geographic consideration Local and related market condition as well as work ethic should be considered and matching business environment appropriately applied. Communication Clear communication is crucial in IJV environment where a lot of conflicts and confusion could occur because of cultural differences. Setting an open networks and freedom where employees can approach management levels easily could create an opportunity for everyone to get involved. Conclusion For countries to develop, create new technologies, use new facilities market and products, joint venture is very beneficial. Joint venture is an opportunity to boost businesses and continues to occur in more countries. Every international joint venture starts with different cultures and because of its multicultural nature it is unavoidable to experience disagreements. Creating mutual benefits and harmonious environments with common objectives and agreed values can overcome the cultural differences and create common culture which benefits partners and uses the positive side of multicultural partnership. It might be more effective to invest in countries that have similar cultures because it would be easier to understand the business networks, market needs and to resolve problems. With countries developing to be multicultural and expanded communication network reaching further distances, it is getting easier to approach new opportunities. People are interested to know other cultures and learn about others. The challenges and complexity in different cultures is unavoidable but nations awareness is very high hence their approach to each other is very positive and relaxed. While achieving strategic fit is more fundemental to the viability of a partnership,a good cultural fit optimises the potential of the partnership and helps to avoid the threats to its continuation which arise from misunderstanding and antipathy. While it is important for partners in an IJV to establish a strategic fit to help improve feasibility of a partnership, an effective cultural match between the companies creates opportunities for a stronger relationship. This helps to avoid misunderstanding, risks and potential issues that could cause damage the partnership. Partners need to establish trust, honesty and priorities to understand elements of successful IJV, structuring relative management style, which is independent from parents company strategy and assigning partners management responsibilities according to their expertise promises positive outcome at the end of the partnership. Partners require creating a relationship based on honesty trust. It is vital for the parties to invest time and resource to understand fundamentals of a successful IJV partnership. Reforming and creating a relative management strategy, which is independent from partner companies are key to a successful joint venture partnership.

Dram Shop Laws Essay

Dram shop laws are instituted for all places which serve alcoholic beverages including restaurants, taverns and bars. An employee of these establishments may not serve alcohol to minors or those ‘visibly intoxicated’. If the person which consumed the beverage leaves the establishment, gets in an accident or causes bodily harm to another person, the establishment and the server may be held liable for damages. However, this should not be the case. Those who were intoxicated and caused the accident should be the only ones held liable for damages he or she caused to another person. Too many people take advantage of the legal proponent which allows these places which serve alcohol to be held liable. I would like to remove this proponent and make a revision to Montana’s Dram Shop laws, making it better for servers and consumers alike. In the following I will tell you some positive and negative outcomes if this change ever were to occur. I am going to answer the question of the whether Montana should have the liability clause which puts establishments at risk of being held financially responsible. In order to come to a conclusion, both sides must be heard. I will begin why we should remove these laws and positive outcomes. Should Montana in fact have liability clauses which enable the tavern or bar to be held liable? The job of a bartender can be a tedious and stressful one. By removing the liability element of the Dram Shop laws, bartenders can focus on their jobs instead of on attempting to recognize the signs of someone who is ‘visibly intoxicated’ (Rumberger: Kirk & Caldwell). This becomes especially difficult on a bustling Saturday evening when the bass of the band is thrumming in your ears and ten different people are calling out, â€Å"Bartender! On busy Saturday nights, not only are the bartenders kept busy, but the tills are as well. Businesses make quite a bit of money on nights like these; however the liability clause can put a damper on the profits of small, local businesses. Part of a bartender’s whole job is to encourage the buying of alcohol, and the drinker should respond by leaving when he or she has noticed they have developed that ‘buzzed’ feeling. The bartender’s job is simple; tend the bar and comply with the wishes of your customers. When servers have to cut off drinkers, feelings are often brushed and money lost. When someone gets particularly offended, physical altercations can often occur, posing a major health safety risk for all those in the bar. With these laws in place, often bartenders and bouncers put their welfare on the line when it comes to removing drunken patrons. When is seemingly too intoxicated to continue drinking, it is the duty of the bartender to refuse any further service to the customer. Even though this is required by law, it can often result in one if not both, of the parties involved to leave with a bump or bruise, if not worse. When it comes to injuries in public establishments, people these days seem to get all together ‘sue-happy. ’ Without these laws putting liability on establishments which took no part in the maiming of others, the person who actually committed the offence will be the only one who can be held responsible. There are many cases which someone is offended, injured or leaves and commits another crime which can then be financially supported by the small business. Now that I have gone over the positives, I will now explain the negative effects of the removal of this element of the Dram Shop laws. We all know drunk driving is an all too common occurrence in the United States. Most people probably don’t know that a studies conducted have shown that nearly 80 million trips a year are made with a driver having consumed some amount of alcohol (Major Mark Willingham). This means that all establishments must do their part in making these numbers go down. By keeping these laws, bartenders will continue to be pressured to keep people better under-control in bars and taverns. Bartenders are specially trained to recognize the signs of people when they are beginning to show signs of intoxication and how to handle the following situations. Without these laws, employees will lose the proper training by employers with the lack of enforcement (CADCA). These guidelines can help to quickly clear up situations which pose a threat to the server or those also in the bar. As an establishment which serves alcohol, taverns and bars have an obligation to their customers to perform all aspects of proper service (expertpages. om). When someone comes into a place to be served alcohol, bartenders should be able to aid in helping for these customers get home by cutting them off. They are also supposed to provide any service which is asked, usually complied with a cheery demeanor. All these aspects create the foundation for proper service in these establishments. Without the liability element of the Dram shop laws, there is an element of pressure which can result in the loss of proper service. The blatant cause for most terms of Dram shop laws is simple; reduce harmful alcohol consumption and all accidents which would be classified as alcohol-related (whatworksforhealth. com). With all the fine-toothed combed sections of these laws, the ideal set-up has been instituted in communities in order to control these situations. With the concept of liability, these laws do not only hold the person who committed the crime or offence, but can help to keep bars and taverns in check and doing their jobs. Some terms that must be corrected before this law becomes valid are the concept of ‘visual intoxication. ’ There is no clear definition by which you can define someone as visibly drunk, some people are just morons. Some people act more or less drunk than they are. The legal drinking age of 21 must also be clearly stated. I still believe that the liability aspects of Dram Shop laws should be removed. Bartenders keep clients in line as much as possible, but should not suffer blame and loss of business in order to make an educated guess at the intoxicated state of another person. Too many people have taken advantage of these small businesses and there needs to be only one person, the one truly responsible, to be held liable. When these establishments get slam-jammed busy, there is no way for one or two people to properly assess the mental state of someone, especially a stranger. Enough pressure is applied to these businesses in economic times like those we are in. we should take away the possibility that someone could take business, money and good name of any bar or tavern.

Banks and credit available to SMEs - Free Essay Example

Sample details Pages: 6 Words: 1859 Downloads: 8 Date added: 2017/06/26 Category Statistics Essay Did you like this example? CHAPTER 1 INTRODUCTION In the process of industrialization small business plays an important and economic growth. It increases per capital income and output, makes available employments for the labour market and usually promotes successful deployment of resources which are considered vital to steering of economic development and growth. It is presumed that the lower income segments of Nigeria benefit when SMEs have better access to finances because they alleviate poverty by creating more jobs and better wages. ( Emeni and Okafor 2008). In many of the developed economies and developing economies both have come to value, realise and appreciate small businesses. Being that small business are pioneering, well-organized, resourceful and allows fast decisions process to be taken because of their relative small size. They are major players in the process of industrialization and economic development. ( Ememi and Okafor, 2008) Don’t waste time! Our writers will create an original "Banks and credit available to SMEs" essay for you Create order In most up-and-coming nation of the world, small and medium enterprises (SMEs) have become the vanguard of economic expansion. They create employment opportunities as the most significant employer of labour force; in addition they increase the nations per capital income and output invariably increasing the GDP by effective resource utilization. Also in large developed nations, SMEs plays a noteworthy role in influencing the economy. Taking China for example, SMEs are said to be accountable for sixty percent of the industrial output employing seventy-five percent of the workforce in the metropolitan centres. ( Anas A.Galadima, 2006). All over the world and in all country, government have come to realise the significant of this class of companies. And as such have originated all-inclusive policies to encourage, give confidence, support and promote the establishment of SMEs. Improvements in small and medium enterprise are a plus for employment generation, solid entrepreneurial base and encouragement for the use of local raw materials and technology. (Oladele, 2009). There are a lot of challenges that SMEs face in both the developed and developing countries and they are massive. One main aspect is financing, the ability to obtain and acquire loans. Most small businesses are not attractive prospects for banks. Berger et al. ( 1998) suggest that larger banks may be less predisposed than smaller banks with less complex structure, to supply credit to small businesses. Back home in Nigeria the talk is very similar with the on-going of other country. But of late the Bankers Committee intervened in 2001 with a scheme called the Small and Medium Industries Equity Investment Scheme (SMIEIS). The idea brought life and empowerment to SMEs discarding all other credit schemes which were not properly implemented. (Aina, O. 2007). Nigerian banking reform is a product of global effort and consolidation is one of its major achievement that everyone have welcomed happily. This consolidation wave has greatly enhance the average magnitude and size of banking institution generally. The mean size of the total assets of banks has increased by 439% from 2003 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 2009, recording =N=2767.78 billion to =N=14,923.00 billion banks total assets figure (CBN report 2009). Prior to the introduction of banking reform, the banking sector was repulsively undersized, small, weak and frail, leading to numerous and several economic setback. Besides the benefits related to consolidation on the supply of credit to small and medium enterprises, merger and acquisition have also increase the size of banks from small less complex establishment to conglomerate multinational companies in Nigeria. These includes mobilization of domestic savings, improved allocation of resources, elimination of deep-rooted inefficiency , mobilization of foreign savings and above all enhanced accessibility of small scale funding. But in all these what is less comprehensible, is the effect that bank MA has on the supply of credit to small businesses in Nigeria.(Emeni and Okafor, 2008). Related Literature Other related studies have established some well renowned facts on the effect of consolidation on small business lending. In a recent article Berger, Allen N., R. Demsetz and P. Strahan. (1999) suggest that consolidation is only valuable and favourable to a certain extent. The consequences of consolidation could have direct and also indirect effects. The direct effect being an increases in bank size, increase in market share and enhance bank performance, the indirect effect can be a reduction in the availability of financial services to small businesses. (Berger, Allen N. R. Demsetz and P. Strahan. 1999). Other studies Vera and Onji (2010) illustrate that because most small businesses depend greatly on less complex small banking institution for their principal source of funding, consolidation of the banking industry may reduce ease of access of loans to small business in the US. Earlier researchers find that small businesses have not been unfavourably affected by bank merger and acquisition on making credit available to small business (Peek and Rosengren 1995, 1998; Berger et al. 1995). This is because these studies relied on data up to the mid-1990, while data as at 1995-1997 being the peak of consolidation were not fully employed. This has proven to be of interest to further scrutinize whether the new wave of consolidation may affect small businesses differently. In view of this importance piece of information and the imperfection of the market mechanism to mobilise and allocate financial resources to socially desirable economic activities of any nation it is worthwhile to investigate the relationship between merger and acquisition and credit availability. Based on the above background, the enthusiasm and motivation of this research is to critically scrutinize and observe if there is any relationship, or connection between bank mergers and acquisitions as a resourceful solution to lending. This study, therefore, want to investigate and find evidence that consolidation between banks of diver structure and asset base that occurred as a result of the Nigerian banking reform of 2004, could negatively affect small business lending. This is the reason why we choose to examine the effect of MA to SMEs in Nigeria. Aim and Objective Aim The main purpose of this dissertation is to examine whether bank mergers and acquisitions are a resourceful solution to lending to SMEs. As a result the main research question is: Do banks mergers and acquisitions increase or decrease credit availability to SMEs? This leads to a number of sub-questions: Does financial performance in the banking sector adversely affected small business lending after MA occurs? What other factors affects or is responsible for credit availability to SMEs from the Nigerian banks? To present key findings and recommendation based on data analysis and information collected. Research Methodology There are several research methods that could have been used in this work, such as a Questionnaire based survey through the distribution of questionnaire. Carrying out direct interviews with Small business owner and Bank managers or loan officers is also an effective means to collection of data information. Since the main purpose of this study is to examine if bank mergers and acquisitions increase or decrease credit availability to SME, we will be using accounting based financial ratio analysis. The use of financial ratio in measuring a banks performance and its effectiveness to distinguish high-performance banks from others is quite common in the literature (Abdulla, 1994a; Samad, 2004a). Data Sample Ten Nigerian commercial banks which have effectively been consolidated with other smaller banks will be considered in this study over the period of 2000-2009 based on the following reasons: First, these banks are long established locally incorporated banks in Nigeria. Secondly they have been involved in the consolidation process from small bank to mega banks, passing through the premerger phase up to the post merger phase. Thirdly the period 2000-2009 effectively covers the span before consolidation and after consolidation. The data that will be used in this study is taken from Bank Scope. The annual financial statement of the top ten commercial banks based on their asset base. All the figures are expressed in Naira (=N=) the Nigeria indigenous currency. Since one of our aims is to examine whether the amount of small business lending is affected by the new consolidation legislation passed by Nigeria government on bank reform, we will also be comparing the figures from the statutory reserve. This is mandatory for all commercial banks in Nigeria to invest 10% of their profit before tax to Small and Medium Enterprise Equity Investment Scheme. It is more likely that we will capture the total amount of small business lending that is actually supplied to small businesses within Nigeria. Dissertation Structure The dissertation is split into five chapters: Chapter one is the introduction of the dissertation topic, related studies and the motivation for the choice of the dissertation Chapter two focuses on the Nigeria banking sector, how the banking sector has developed in Nigeria over the years. Covering the history of the Nigerian banking sector divided into four periods: the budding period, the expansion period, the consolidated period and the post-consolidated period. High lighting major financial developments from liberalisation that saw the existence of 87 banks to the consolidation of banks by the Central Bank of Nigeria deadline of 2005. Chapter three is a literature review on academic literature and analytical view on merger and acquisition and its theory in banking. This chapter aims at providing a complete picture of bank mergers and acquisitions (MAs) in the theory of banking and at offering economic evaluation and strategic analyses of the process. The main characteristics of this process is how it has affected lending to small business Chapter four introduces the Small and Medium Enterprises, what they are, why they exist. This Section will review some recent literature that is particularly relevant to the effect of bank consolidation on small business lending. Chapter five discusses the empirical results, in which the main findings of the performance of the banks during the period 2002 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 2009 are analysed. This last chapter, Chapter six concludes and highlights the limitations of the study and recommendations for the future research Summary We have been able to introduce the topic of the dissertation and the motivation behind why it was considered important to investigate funding of the small and medium enterprises. Small business play vital role in the process of industrialization and economic growth. It is presumed that the lower income segments of Nigeria benefit when SMEs have better access to finances because they alleviate poverty by creating more jobs and better wages. Developments in small and medium enterprise are a plus for employment generation, solid entrepreneurial base and encouragement for the use of local raw materials and technology. Governments all over the world have realised the importance of this category of companies and have formulated comprehensive public policies to encourage, support and fund the establishment of SMEs. The most worrying challenges facing SMEs in many developing countries is funding. In the next chapter we will be reviewing the Nigerian banking system. We will be looking at a brief history of the Nigerian banking system dividing its growth into four phases, and see how it has evolved from many smaller banks into fewer mega banks. We shall also be looking at the major regulators of this industry and see how they have effectively influence the actions that has lead to merger and acquisition in the banking industry. Also see how the merger and acquisition phase has influenced lending to the small business through the new monetary policies on SMEEIS and Microfinance banks to aid economic growth, which is the main aim of this dissertation.

The Debate On Marriage And Parenting Rights For Gay And

The debate on marriage and parenting rights for gay and lesbian individuals has been one of the most hotly contested social issues in recent history. While many arguments are cited to prevent gay couples from enjoying equality, these arguments ultimately condense to concerns rooted in homophobia. Opponents of the LGBT community contend that same sex parenting contradicts the natural order of the world, subjects children to unnecessary societal stigma, and that the state has a right to favor heterosexual norms. However, these concerns are either unfounded or unjustly infringe on the rights of gay and lesbian couples. Consequently, there is no reason to prohibit gay or lesbian couples from obtaining custody of children. Proponents of the†¦show more content†¦Therefore, it is unjust to use the same argument to prevent gay couples from adopting. Skeptics of gay and lesbian parents also raise the concern that the children of same sex couples would be subject to stigma from society. They argue that gay parents should not be granted custody rights because their children would be subject to unnecessary ridicule by their peers. In short, their position is that children should not be placed into harsh conditions simply due to their parents’ â€Å"sexual behavior.† While the well being of the child is an important concern in custody matters, stigma that exists within society must not be written into law. Bigotry is an unfortunate component of human nature, and it will likely never be erased completely. The law cannot control these biases, but it should not be influenced by the fleeting passions of the time. If the law gives biases that exist within society legitimacy, they will merely be reinforced for generations. Furthermore, a primary purpose of law is to serve as a guardian of the minority rights. Basic rights must be enshrined in law so that they are insulated from tyrannical majorities that might act with malice toward a minority group. 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