Limitations of Joint Ventures

1. Cultural differences and differences between economic development of two countries result in different managerial perceptions of the same problem. This develops problems for effective joint ventures.

2. Joint ventures across national boundaries create problems of equity participation, voting rights, dividend remittances and management control.

3. Foreign equity capital can be introduced according to provisions of FEMA (Foreign Exchange Management Act). There are, thus, legal restrictions on foreign investment.

4. Lack of co-operation and co- ordination amongst the combining firms will result in ineffective joint ventures.

5. In the urge to maximize individual share, joint venture business mat not get the necessity boost.

6. Combination of unequal business partners may result in quasi- mergers than joint ventures.

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