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A fifty-fifty joint venture signifies both parties will share the profit and losses, whereas an acquisition the entity that acquired another company is obliged to overcome all the losses and gains solely. The main feature that distinguishes joint venture from acquisition is the company’s share of profits and losses. An acquisition on the other hand is when one entity takes legal control over another in the same target market (Hill C, 2005).Ī joint venture and acquisition experience the same advantages and benefits of access to foreign markets and technology a company may not have.
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A joint venture is a legal entity formed between two or more parties to undertake economic activity together (Hill C, 2005).
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One method was acquisition where we would see one company acquiring the other. It is clear that instead of a joint venture, Sony and Ericsson could have chosen an alternative method to collaborate and form Sony Ericsson, as long as its objectives and motivations were not at any risk. According to Ericsson’s 2001 Financial Report, both Ericsson and Sony were in desperate need of a deal to secure skills and tactic knowledge which the opposing company possessed in hope to expand their market share to compete with Nokia and Motorola. Ericsson was at the leading edge in communication systems and protocols, whereas Sony enjoyed leading strengths in consumer electronic production processes, including design and product planning, as mentioned briefly earlier. The alliance allowed both parties to enjoy the resources and technology of each party. and Ericsson was to combine Sony’s world-class technological skills in audio, video and communications with Ericsson’s technological leadership to challenge Finland’s Nokia and United State’s Motorola in gaining the markets leading position as the world’s most advanced global telecommunications corporation (Ericsson Annual Report, 2001). The pivotal reason behind the alliance by Sony Corp. The joint venture in 2001 saw Sony and Ericsson combining key competence resources and capabilities such as capital, management and technological skills to enlarge their market share together in hope to compete with telecommunications giant, Nokia. It was an extreme challenge and near impossible for Ericsson or Sony alone to compete with the worlds leading telecommunications corporation Nokia, due to their relatively small market share they both experience (Electronic Times, 2001). S and European market in response to its expansion project. Sony also enjoyed Ericsson’s world-class knowledge of radio frequency technology and its existing distribution channels around the world.Įxploiting Ericsson’s knowledge, Sony was able to build lasting relationships with wireless carriers across the world (Mark V, 2001) which aided Sony to re-enter the U. Its expertise in digital camera and walkman made the 3G phone outstanding and provided Sony Ericsson with an initial competitive edge, as the features of digital camera and music functions were the basic requirements for the new generation of mobile phones (Alfred H, 2004).
#SONY ERICSSON PORTABLE#
Sony was the pioneer in the portable consumer electronics industry due to its ability to master design and marketing techniques (Electronic Times, 2001). However, the joint venture with Sony expected it to assist Ericsson fill in the gaps (Lamar L, 2001). Furthermore, due to the ever changing industrial environment of the mobile-phone industry, Ericsson was forced behind due to its inability to keep up-to-date with the market and as a consequent, slowly loosing its already minimal market share (Manuel 2002).
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