1.

Explain how joint venture can enable Anheuser-Busch (AB) to achieve its
objective of maximizing shareholder wealth.

A pure domestic company going to international level through several

stages; import and export, licensing and franchising, joint venture and
established operation facilities abroad. The motives make a company go
for international trade is to find new market, economic cost of operation
and seeking new knowledge and expertise. In case on joint venture
between Anheuser-Busch and Kirin, this strategic alliance gives Anheuser-
Busch an insight about Japanese culture and less risky foundation to enter
Japanese market later. Shareholder wealth maximization can be
achieves by increase revenue and minimize the cost. This JV helps
Anheuser Busch to penetrate Japan market without substantial
investment abroad. Having efficient network distribution within
Japanese market and build stronger brand name will help Anheuser-Busch
gaining foreign market share and contributing to incremental sales
revenue as the local market mature. While cost minimization can be
achieve by mutual arrangement with JV partner, in this case Kirin
Brewery, to distribute Anheuser-Busch product and promoting Anheuser-
Busch brand name in Japan efficiently. Build brand name through
advertising is major cost in marketing as we can look, international
company spend billions of dollar every year for advertising. And some of
them fail because of lack local cultural awareness.

2. Explain how joint venture can limit the risk of international business.

The common risks associated with international business are foreign

exchange risk, political risk, government intervention risk, market risk and
cultural risk. All those risk arose because of unfamiliar environment and
uncertainty. Joint venture can limit those risks for reason sharing basis
in term of knowledge and expertise, ease of market entry and local
competition. Local company participation in joint venture manage to
handle complexes problem that foreign company always face when
dealing with local business environment, local authority, local financial
institution and local community. It can be conclude that partnering with
local company will help foreign party to have better understanding in the
foreign environment.

3. Explain how Anheuser Busch could lose some of its market share in
countries outside of Japan as a result of this particular venture.
Joint venture with Kirin Brewery mean that Anheuser Busch
willing to share its expansion strategy with Kirin. Kirin could use
Anheuser Busch’s strategy to enter market outside Japan and this
relatively it can affect Anheuser Busch’s market share. In my opinion, the
benefit and prospect Anheuser Busch derived from the JV arrangement
outweigh any adverse effect to the company wealth.

INTERNATIONAL FINANCIAL MANAGEMENT

FIN 542
‘TEST 2 – CASE STUDY ON ANHEUSER BUSCH JOINT VENTUTE’

En. Ahmad Husni Bin Mohd Rashid

Lecturer FIN542
FPP UITM Shah Alam

Mohamad Azwan Bin Ayop

2007118507
BM222