Hierarchies, Incentives and Firm Structure Essay

Hierarchies, Incentives and Firm Structure - Essay Example They suggest that it contains the majority of elements that a partnership has only that it defines the period that it will end. However, joint ventures have been said to have their own predicaments. This paper describes the joint venture of SynChem and Henlin Biotech in utilizing their power in chemical research in technologically upgrading the chemical industry in China. This happened after SynChem had submitted their first application for a patent after discovering the linker technology anti-body drug conjugate (ADC) (Cheng, p.76). The paper additionally describes the benefits and/or problems that all of one of the participants in the joint venture. Finally, it discusses how the joint venture could be set up in such a way so that it still produces the potential benefits but avoids some of the pitfalls inherent in such projects. 2.0 Benefits and Pitfalls The chairman, president and other esteemed guests from Henlin Biotech visited the offices of SynChem with an intention of negotiat ing a joint venture with the company on upgrading the chemical industry in China. These visitors said that by combining their capabilities in research, both companies would greatly benefit in modernizing or upgrading their technologies. There are numerous benefits or pitfalls that such a joint venture may encounter during the course of executing business. The companies in the joint venture may benefit by making local contacts with people who have a greater understanding of the problems that technology is having within the Chinese chemical industry (Ekvall & Evan, p.90). These local contacts may help the companies in building closer relationships with other players in the industry who may bring in additional information and resources for the benefit of the joint venture. Both of these parties that are involved in the joint venture may in turn gain experience on the matters affecting the industry in addition to becoming more familiar the rules or practices used within the Chinese chem ical industry (Bouchikhi & Kimberly, p.112). The joint venture that SynChem and Henlin Biotech are into will greatly benefit both companies that have combined their talents along with resources for achieving their objectives (Cheng, p.88). This is mainly because the companies will be able to pool together their individual workforces, equipment, finances and expertise in overcoming any risks that they may encounter in the industry. Both of the companies in the joint venture may also be able to obtain additional capital sources for facilitating their activities. Their joint venture will enable them to have stronger capital bases from which they can draw finances, additional cash or contributions on their capital from the shareholders within them (Hamilton & Zhang, p.165). The move would greatly enable them in preventing shortages of cash which may hamper their activities or the profitable completion of their projects. The companies within this joint venture which are SynChem and Henli n may additionally benefit through their increased bidding powers and bonding capacities. The companies combined efforts may assist them in attaining more powers when making bids in future projects. This is because the companies in the joint venture may have an extra ability of raising the resources and finances required to complete various projects (Campbell, p.87). Since SynChem is more experienced and