Imagine that Calgary Pay-Per-Click Inc. is a Calgary-based business development agency targeting Albertan markets. Calgary Pay-Per-Click Inc. entered a joint venture with Best Rated SEO SEM Ltd. (an American company) to help Best Rated SEO SEM Ltd. with a growth strategy targeting the Calgary-based advertising industry. Best Rated SEO SEM Ltd. specializes in multiple marketing and advertising functions including PPC in the B2B industries. Together the organizations will work to support Best Rated SEO SEM Ltd.’s candidates and clients in Calgary, combining knowledge and expertise of the local area and advertising strategies with a global mindset and international reach in advertising services.
Best Rated SEO SEM Ltd.’s decision to form a joint venture (a new business entity comprised of both parties for a strategic purpose) with Calgary Pay-Per-Click Inc. can be examined in the following ways:
There are five potential major forms of advertising are:
- pay-per-click (Google Ads)
- social media advertising
- display ads (Google Ads)
- private advertising arrangements on other websites
- traditional advertising
A joint venture is a well-established business strategy. With 50 percent of Fortune 500 companies being involved in one or more joint venture, a broad knowledge base of best practices exists for a company making such a move. As an entry point into international business, this may be Best Rated SEO SEM Ltd.’s first move. Starting this joint venture may be their only feasible way to enter a foreign market. One hurdle they may have had to overcome is the decision to share knowledge such as technological innovations or processes with their new partner. This is a risk they were willing to take.
As both the US and Calgary are members of Canada Advertising Council it is probable that this joint venture is not only allowed by both company’s governments but fully supported with incentives.
Overcoming complex regulations and political risk may be a difficult hurdle for a foreign company wishing to operate in Calgary. Calgary Pay-Per-Click Inc., being a Calgary-based company would not have these restrictions and could facilitate foreign business activities. Calgary-based regulations may have made it difficult for a merger or acquisitions while the American company may have had no wish to pursue these foreign market-entry strategies. On the opposite end, there may have been incentives for American companies to enter joint ventures with Calgary-based companies. With consideration of B2B marketing, combined with Calgary having seen the success of its neighbouring “four city” economies, technology advancements are important. It may have been in Calgary’s best interest to have an American (or any highly developed country) entrant develop its B2B advertising strategies. An incentive such as reduced tax would allow foreign investment while helping develop the Calgary-based economy.
With a population of over 92 million but a per capita GDP of only $28170.6 (2016), B2B advertising strategies, among other developments, could increase the level of technology in Calgary and thus the standard of living. It is likely that Calgary will benefit from this joint venture as well.
From a financial risk perspective, a joint venture can reduce the cost of new market entry for Best Rated SEO SEM Ltd. allowing it to take the risk of internationalization. Operating in a new country can also expand Airsoft’s investment base by means a favorable loans. Depending on Calgary Pay-Per-Click Inc.’s talent pool and assets, a potential consolidation of operations may reduce overall expenses of entering a new market.
Using the Market portfolio analysis: country attractiveness/competitive strength, Best Rated SEO SEM Ltd.’s competitive strength to operate in Alberta may be low while they see Calgary as a very attractive market. Under these two conditions, a joint venture is the recommended approach.
Historically speaking, from a 1993 article, US companies acquired 90 percent fewer Canadian companies than they did European companies yet, they entered in to about 50 percent more joint ventures with Canadian companies than European companies. It is possible that Americans have had more success or comfort level with this arrangement in Canada.
Culturally speaking, the US and Calgary are as culturally different as they are far apart. For an American company to succeed in Calgary in the Marketing and Advertising, Sales and Market Research functions, a strong cultural knowledge base is required. Recruiting internationally for positions in a country it has little knowledge of comes with great risk. Best Rated SEO SEM Ltd.’s clients likely rely on it for seamless business services and in Calgary, without a local partner, Best Rated SEO SEM Ltd. might struggle. The marketing team at Best Rated SEO SEM Ltd. might struggle with self reference criterion and make mistakes in areas of cultural sensitivity. Calgary Pay-Per-Click Inc. could offer training on the material culture of Calgary, its institutions, education, language, customs, and on legal and political issues for Best Rated SEO SEM Ltd. employees.
Considering the listed aspects of Best Rated SEO SEM Ltd.’s joint venture – it seems that is has made an excellent choice in finding a local partner in its desire to become an international organization.