In practice, parties in joint venture tend to concentrate on the activities that best match their capabilities and competences. Those activities requiring local market knowledge, which Finnish partner is not able to implement, like adjustment of legal procedures, administrative, management activities, etc. are handed over to the local partner, which is a private or public medical organization in a given case. Meanwhile, integration of technological and operating practices, procedures and other contributions from the Finnish healthcare system are responsibilities of the foreign partnering HSC. Moreover, running a Joint Venture requires financial flows from both parties in proportion established by the contract and Joint Venture in a Healthcare Services Market Entry by the extent of ownership of each partner. The same proportion is complied in allocation of return flows. In addition, parties get the experience and knowledge that is exchanged during a joint working progress.
The venture is a separate entity, where revenues, expenses and assets are divided between parties. Joint venture is a highly potential foreign market entry mode for the HSC in terms of gaining an advantage of sharing of risk and ability to combine the local in‐depth knowledge of Russian occupational healthcare system specifications of a foreign partner with a Finnish partner’s know Joint Venture in a Healthcare Services Market Entry‐how in technology and healthcare system.
Moreover, joint venture results in joint financial strength. The extent of control is also satisfyingly higher, than it is in above mentioned entry strategies. Joint Ventures are also more permanent, than any other previously described entry mode, there is a lower level on uncertainty, since it contributes stronger to the long-term objectives of the HSC.
Disadvantages are similar to the strategic alliance option. In this entry mode the extent of partner’s collaboration is extremely high and partner’s selection requires maximal due diligence. In case of serious conflicts caused by Joint Venture in a Healthcare Services Market Entry disagreements in management or different objectives pursuing, there is always a chance of becoming the strongest competitors, especially in terms of crisis and tough market situation.
1.8.5 Mergers & Acquisitions in a Healthcare Services Market Entry
The initial flow from foreign HSC to the local private medical organization in M&A strategy is mainly financial funds. Foreign healthcare system knowledge flow is required on further stages, when HSC actually starts operating the business. The same goes with the reverse flow of local market knowledge. The scale of financial investment also varies in accordance with the extent of ownership, whether it is an acquisition Joint Venture in a Healthcare Services Market Entry or merger. The figure 4 presents approximate scheme of investment and return allocation. Obviously, it always depends on the case, acquiring may be partial, and in merger parties assign ownership in any proportion.
Apparently, now the market is opportune for mergers and acquisitions by foreign companies. In terms of crisis numerous medical companies with a good operating model, premise, fully equipped, with extensive networks of suppliers, customers and partners are on the edge of bankruptcy. Therefore, additional funding is needed as never before and the prices for acquiring ownership of St. Petersburg medical organizations are relatively low at the moment Joint Venture in a Healthcare Services Market Entry, especially with a current position of Russian Ruble to Euro currency.
Meanwhile, favorable price may also enhance the risk. Acquiring a company on a foreign market is a challenging task, investigation has to be extremely detailed and accurate. Market situation may force business owners to conceal company’s problems to encourage the HSC to make the deal. The risk and uncertainty level in this entry mode is the highest. The procedure is also though from a legal perspective and a layer of additional costs is always expected with this kind of foreign market strategy. Business owners sometimes avoid Joint Venture in a Healthcare Services Market Entry acquisition or establishing of wholly owned subsidiary in countries with significant corruption, joint venture is preferred instead.