Strains on Partnership Arrangements in Business :: Business Ownership

a.Collaborations importance to partnersOne partner may give more trouble attention to a collaborative arrangement than the other does. a. If things go wrong, the active partner blames the less-active partner for its lack of attention, and the less-active partner blames the more active partner for make poor decisions. The difference in attention may be due to the different sizes of partners.b.Differing objectivesAlthough companies enter into collaborative arrangements because they have complementary capabilities, their objectives may evolve differently over time. For instance, one partner may urgency to reinvest earnings for growth and the other may want to receive dividends. One partner may want to expand the product line and sales territory, and the other may see this as competition with its wholly owned operations. A partner may privation to sell or buy from the venture, and the other partner may disagree with the prices.c.Control problemsBy sharing the assets wit h another company, one company may pull away some control of the extent or quality of the assets use. When no single company has control of a collaborative arrangement, the operation may lack direction. Studies evidence that when two or more partners attempt to share in an operations care, failure is much more likely than when one partner dominates. However, the dominating partner mustiness consider the other companys interests. For this reason, studies also show that joint ventures with an even split in ownership are likely to succeed because the financial ownership ensures that management will consider both partners interests.d.Partners contributions and appropriationsOne partners capability of contributing technology, capital, or some other asset may diminish compared to its partners capability over time. In almost all collaborative arrangements, there is a danger that one partner will use the other partners contributed assets, enabling it to become a competitor. e.Difference s in cultureCompanies with different cultures differ in how they evaluate the success of their operations.