Joint Ventures


joint venture (JV) is a business agreement

A joint venture (JV) is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity.

By Alla Gul (MBA)Our Contributor

A joint venture (JV) is a legal organization that takes the form of a partnership in which individuals, groups of individuals, companies, or corporations jointly undertake a transaction for mutual profit (“Joint Venture”, n.d.).

The parties agree to create a new entity by contributing equity.

Then they share in the revenues, expenses, and control of the enterprise. This paper discusses why joint ventures may be formed and what benefits may be expected when domestic and foreign companies form a venture. Then resent joint venture example is briefly illustrated.

The partnership can happen between big companies in an industry to differentiate, for example. The joint venture can occur between two small businesses that partner in order to successfully fight their bigger competitors. In addition, companies with identical products and services can also join forces “to penetrate markets they wouldn’t or couldn’t consider without investing tremendous resources” (“Joint Venturing”, n.d., p. 2). Next, a large company can decide to form a joint venture with a smaller business “in order to quickly acquire critical intellectual property, technology, or resources otherwise hard to obtain, even with plenty of cash at their disposal” (“Joint Venturing”, n.d., p. 2). To add, “There are good business and accounting reasons to create a joint venture with a company that has complementary capabilities and resources, such as distribution channels, technology, or finance” (“Joint Ventures (VS)”,  n.d.). Below are some major reasons for forming a joint venture:

Internal reasons

1.         Build on company’s strengths

2.         Spreading costs and risks

3.         Improving access to financial resources

4.         Economies of scale and advantages of size

5.         Access to new technologies and customers

6.         Access to innovative managerial practices

Competitive goals

1.         Influencing structural evolution of the industry

2.         Pre-empting competition

3.         Defensive response to blurring industry boundaries

4.         Creation of stronger competitive units

5.         Speed to market

6.         Improved agility

Strategic goals

1.         Synergies

2.         Transfer of technology/skills

3.         Diversification

(“Joint Venture”, n.d.). 

Joint ventures between companies headquartered in different countries can be particularly beneficial. First, companies may use joint ventures to gain entrance into foreign markets. For example, foreign companies form joint ventures with domestic companies that already are present in markets the foreign companies would like to enter.  Moreover, due to local regulations, some markets can only be accessed via joint venturing with a local business (“Joint Venturing”, 101, n.d., p.2). For example, China and to some extent India, require foreign companies to form joint ventures with domestic firms in order to enter a market (“Joint Venture”, n.d). Next, the foreign companies “generally bring new technologies and business practices into the joint venture, while the domestic companies already have the relationships and requisite governmental documents within the country along with being entrenched in the domestic industry”( “Joint venture”, n.d.). For example, joint ventures are common in the oil and gas industry, and are often formed between a local and foreign company. “A joint venture is often seen as a very viable business alternative in this sector, as the companies can complement their skill sets while it offers the foreign company a geographic presence” (“Joint Venture”, n.d.).

Recently the Hindustan Aeronautics Limited (HAL) and CAE, Canada signed an agreement to establish a joint venture company that will open a helicopter simulator training center in Bangalore, India.

The company, Helicopter Academy To Train By Simulation Of Flying (HATSOFF), will be owned equally by HAL and CAE. The training center is expected to begin operations in late 2008 by providing both civil and military helicopter pilot and maintenance training services. (“HAL”, 2007)

Questions to Answer Before You Approach a New Joint Venture Partner

Questions to Answer Before You Approach a New Joint Venture Partner.
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CAE is a world leader in providing simulation and modeling technologies and integrated training solutions for the civil aviation industry and defense forces around the globe (“About CAE”, n.d.). The Hindustan Aeronautics Limited (HAL) is in the list of top 100 defense companies in the world (“HAL 34th”, n.d.). Among its products are helicopters, aircrafts, advances communication and navigation equipment, and aerospace equipment (“Our Products”, n.d.). By forming the joint venture, the CAE is trying to extend its business-jet training network, to expend its distribution channels, to increase sales of its stimulators, and to capture and extend into India’s growing market (“Remarks for”, 2007,  p.3).  For the Indian partner, this joint venture provides the opportunity to differentiate, to acquire new skills and technology and to extend its marketing reach. Finally, both companies are expected to benefit from a development of a new market and from growth in revenues and profits.

To conclude, a joint venture is a strategic alliance where two or more parties form a partnership to share markets, intellectual property, assets, knowledge, and,  profits. (“Joint Venturing”, n.d., p.1).  The partnership may be formed between domestic companies or between domestic and foreign partners. When carefully planned and successfully implemented, joint ventures bring multiple benefits to parties involved

 By Alla Gul (MBA)Our Contributor


References

About CAE. CAE Inc. Retrieved September 26, 2007 from

 http://www.cae.com/www2004/About_CAE/index.shtml

HAL, Canada’s CAE ink joint venture for helicopter simulator training center. (2007).

Yahoo Business News. Retrieved September 26, 2007 from  http://in.news.yahoo.com/070926/139/6l8gn.html

HAL 34th among top 100 defense firms. Hindustan Aeronautic Limited. Retrieved

 September 26, 2007 from http://www.hal-india.com/34th.asp

Joint ventures. Cornell University Law School.  Retrieved September 26, 2007 from

 http://www.law.cornell.edu/wex/index.php/Joint_venture

Joint venture. Wikipedia. Retrieved September 24, 2007 from

 http://en.wikipedia.org/wiki/Joint_venture

Joint ventures (JVs). E-coach: Sharing Capital, Technology, Human Resources, Risks

 and Rewards. Retrieved September 26, 2007 from

 http://www.1000ventures.com/business_guide/jv_main.html

Our products. Hindustan Aeronautic Limited. Retrieved September 26, 2007 from

 http://www.hal-india.com/products.asp

Remarks for first quarter fiscal year 2008 results. (2007). CAE. Retrieved September 26,

 2007 from

http://www.cae.com/www2004/Investor_Relations/PDF/2008/CAE_FY08Q1_Remarks-en.pdf

Scott Allen. Joint venturing 101. About.com- Entrepreneurs. Retrieved September 26,

 2007 from http://entrepreneurs.about.com/od/beyondstartup/a/jointventures.htm

Why do we vote on Tuesday? ELECTION 2012: WHAT’S AT STAKE


Your-vote-countsWhy do we vote on Tuesday?

Election Day in the United States is the day set by law for the general elections of public officials. It occurs on the Tuesday after the first Monday in November.

The earliest possible date is November 2 and the latest possible date is November 8.

The next election will be held on November 6, 2012.  (http://en.wikipedia.org/wiki/Election_Day_(United_States) )

A uniform date for choosing presidential electors was instituted by the Congress in 1845.

Many theories have been advanced as to why the Congress settled on the first Tuesday after the first Monday in November.

The actual reasons, as shown in records of Congressional debate on the bill in December 1844, were fairly prosaic. The bill initially set the national day for choosing presidential electors on “the first Tuesday in November,” in years divisible by four (1848, 1852, etc.). But it was pointed out that in some years the period between the first Tuesday in November and the first Wednesday in December (when the electors met in their state capitals to vote) would be more than 34 days, in violation of the existing Electoral College law.

So, the bill was amended to move the national date for choosing presidential electors forward to the Tuesday after the first Monday in November, a date scheme already used in the state of New York.

In 1845, the United States was largely an agrarian society. Farmers often needed a full day to travel by horse-drawn vehicles to the county seat to vote.

Tuesday was established as Election Day because it did not interfere with the Biblical Sabbath or with market day, which was on Wednesday in many towns.
November was chosen because the economy was driven by farmers

“There’s religious, economic and political reasons we vote on Tuesday,” said Mower county auditor/treasurer Doug Groh. “It all stems from 1845.”

It was the year James Polk became our 11th president and Texas became our 28th state.

“Horse and buggy days, and the county seat was the polling place,” Groh told us.

“A lot of people might have to travel and stay overnight to vote,” added Austin city clerk Lucy Johnson. And since Sunday was a day of rest:

“They allowed Monday to travel to the county seat to vote, so then they voted on Tuesday,” Groh explained.

“November was their first slow month,” said Johnson.

And there was a safe political reason for keeping the vote in November.

“It’s far enough from April 15th when you last paid taxes you kind of forgot, and you haven’t started to think about paying taxes again on April 15th to influence your vote,” Johnson explained.

(Source: http://kaaltv.com/article/stories/s2817722.shtml )

seal-of-the-president-of-the-united-states

Seal of the President of the United States

Some activists oppose this date on the grounds that it decreases voter turnout because most citizens work on Tuesdays, and advocate making Election Day a federal holiday or allowing voters to cast their ballots over two or more days. The United Auto Workers union has negotiated making Election Day a holiday for its workers at the U.S. domestic auto manufacturers.

Many states have implemented early voting, which allows the voters to cast ballots, in many cases up to a month early. Also, all states have some kind of absentee ballot system. The state of Oregon, for example, performs all major elections through postal voting that are sent to voters several weeks before Election Day. Some companies will let their employees come in late or leave early on Election Day to allow them an opportunity to get to their precinct and vote.

Move Election Day to the weekend…

Soboroff and Israel say Tuesday voting bars access to democracy and keeps America’s voter turnout chronically low. They point to census survey data showing that 1 in 4 people says he’s too busy or his schedule doesn’t allow him to get to the polls.

Their solution? Move Election Day to the weekend. Israel has been introducing and reintroducing a bill to move voting to the weekend.

But moving poll day turns out to be no easy task. The weekend voting bill keeps dying in committee. And earlier this year, when the Government Accountability Office talked to elections officials about how weekend voting would work, they came up with a list of logistical difficulties, from keeping equipment safe overnight to recruiting poll workers to work the weekend. There’s also, of course, no guarantee that moving Election Day would change voter turnout.

Then there’s the simple fact that Americans have gotten used to voting on Tuesday. “We’re a very traditional county, and that became a tradition in a lot of ways,” says Ritchie. “That’s the way people were accustomed to doing it, people could count on it, you could set your calendars on it.”

(Source: http://www.npr.org/blogs/itsallpolitics/2012/10/23/162484410/why-are-elections-on-tuesdays )

Need To Know by PBS.

What’s at Stake reviews top campaign issues and considers how the outcome of the election could impact voters’ lives.

What’s at Stake: PBS Election 2012 From jobs and taxes to climate change, PBS presents an in-depth look at the issues


Check this video out – What’s at Stake: PBS Election 2012

Episode: What’s at Stake: PBS Election 2012

What’s at Stake leads viewers through issues at the center of this year’s campaigns: jobs and tax policy, entitlements and debt, healthcare, and foreign policy. Frontline, PBS Newshour,
Need to Know and Washington Week in Review contribute their special reporting and analysis.

Latest news One Day before Election Day!

“WASHINGTON (Reuters) – President Barack Obama and Republican challenger Mitt Romney make a frenetic dash to a series of crucial swing states on Monday, delivering their final arguments to voters on the last day of an extraordinarily close race for the White House.

After a long, bitter and expensive campaign, national polls show Obama and Romney are essentially deadlocked ahead of Tuesday’s election, although Obama has a slight advantage in the eight or nine battleground states that will decide the winner.”


“Romney, who would be the first Mormon president, has centered his campaign pitch on his own experience as a business leader at a private equity fund and said it made him uniquely suited to create jobs.

Obama’s campaign fired back with ads criticizing Romney’s experience and portraying the multimillionaire as out of touch with everyday Americans.”
(Source: http://news.yahoo.com/obama-romney-sprint-unpredictable-campaign-finish-021401657.html)

History of Income Tax in the United States


History of Income Tax in the United StatesThe history of income tax in the United States is also a study in irony.
As an English colony, the American Revolution began with the slogan of “taxation without representation is tyranny.” Today, we have plenty of representation, but the tax burden is heavier and very fluid.

The concept of taxing income is a modern innovation and presupposes several things: a money economy, reasonably accurate accounts, a common understanding of receipts, expenses and profits, and an orderly society with reliable records. For most of the history of civilization, these preconditions did not exist, and taxes were based on other factors. Taxes on wealth, social position, and ownership of the means of production (typically land and slaves) were all common.

A Brief History of Income Tax in the United States

In the Beginning

As a new nation, the United States Constitution becomes the centerpiece of government in this country with each colony adopting it by 1787. One of the provisions of the Constitution allows the federal government to tax the people as it sees fit. Pennsylvania was the first to object to a tax.

Pennsylvania was the first to object to a tax.Originally, any tax proposal would fund the daily obligations of running a central governing body for the good of the nation. Congress would establish a federal individual income tax in 1861 to raise funds to support the Civil War effort.

They let that federal income tax expire in 1872 and soon came to the reality that funding the government was a top priority and that each citizen must participate in that effort.

The implementation of an initial federal income tax was not lasting as the Supreme Court votes it unconstitutional in 1894.
Congress did adopt and enforce the corporate income tax in 1909 while, at the same time, beginning talks about a Constitutional amendment to establish a federal income tax.

The Sixteenth Amendment

Congress approves and adopts this amendment in 1913 and the annual collection of an individual income tax begins. People with income above $500,000 pay the highest income tax rate of 7%.
In 1914, the Bureau of Internal Revenue presents the first Form 1040 even as members of Congress were vocal about the fact that the form was too complex.

Over the next sixty years, the income tax rate gradually rose to a record high of 94% and drops to 80%, where it settles until the late 1960s. When it began, the income tax in the United States was grossly unfair. Yet, over the years, fixing it only made it grossly unfair, complex, arbitrary and corrupt.

It was under President Howard Taft that the constitutional amendment legalizing a personal income tax and a corporate income tax came into being.
Taft’s proposal was brilliant, ahead of its time and became the law in 1913 as his term was ending.
President Woodrow Wilson and a solid Democratic Congress were prompt to enact a personal income tax.

A Two-Tax Dilemma

Deductions from income, a feature of the first federal personal income tax remains to this day. It reduces taxable income by the amount of the deductions. The corporate income tax, a temporary setup, remains in effect to this day allowing the upper class, who own businesses and optimize their riches, to use the two taxes to their advantage.

The lawyers and accountants, working within the system, were capable of finding creative legal methods to utilize the two systems to the client’s advantage. Congress spent many hours with income tax reform to outlaw or regulate these loophole advantages. While its goal was admirable, they only made the tax code more cumbersome.

One consequence of keeping the corporate and personal income tax separate was public accusation of unfair practices.

The rich are not paying their fair share to support the government and its infamous budget.

Internal Revenue Service

History of Income Tax in the United States

A Brief History of Income Tax in the United States

During the mid-to-late 1950s, the Bureau of Internal Revenue became the Internal Revenue Service (IRS). Its Commissioner and Chief Counsel are appointments made by the President and brought to the Senate for confirmation.

Forty years later, the IRS Restructure and Reform Act brought a reorganization meant to resemble an organization in the private sector. The new model was one of customer service grouping customers with similar needs together.
April 15th is Tax Day, although it was not always the deadline for filing the individual income tax.

The IRS Mission
Provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.

This mission statement describes our role and the public’s expectation about how we should perform that role.

  • In the United States, the Congress passes tax laws and requires taxpayers to comply.
  • The taxpayer’s role is to understand and meet his or her tax obligations.
  • The IRS role is to help the large majority of compliant taxpayers with the tax law, while ensuring that the minority who are unwilling to comply pay their fair share.

income tax in usaRevenue and Expense Precipice

The accounting system for the balance of incoming revenue and outgoing expenses suffers abandonment in favor of limitless spending and then borrowing to finance spending. Income tax monies became bailouts for large companies. These companies are so vital to the economy that we could not allow them to fail.

The 10-year tax breaks from President Bush’s stimulus packages are on extension for one or more years. With the advent of a new presidency, income tax reform is more than just a possibility.
The United States’ debt ceiling reaches a new height almost everyday and revenues cannot possibly sustain the growth of this debt.
A new world order is emerging and the history of income tax in the United States is about to acquire a new chapter.