A simple model of international joint venture distributorships: The American-Kuwaiti experience

The paper develops an analytical model for analyzing international joint venture distributorships in marketing channels selling highly differentiated industrial products. Regarding four alternative forms of demand functions, profits of channel members and consumer welfare under the joint venture arrangement are compared with those under the classic vertical integrated and decentralized structures. Furthermore, optimal allocation of joint venture benefits is discussed and the influence of attitude towards risk and bargaining power have been examined. A case study from international marketing is presented in relation to the theoretical work developed herein. It describes the events that have led to the formation of a joint venture between an Ameircan manufacturer and a Kuwaiti distributor as well as the factors that have contributed to its termination. Implications of the research and its findings to management are also discussed.