International Finance 535
Homework # 1
17. International Joint Venture.
a. The joint venture enabled Anheuser-Busch to achieve its objective of maximizing
shareholder wealth by penetrating the Japanese foreign market. Joint ventures require
smaller investments as opposed to Anheuser-Busch having to make a direct foreign
investment. A foreign acquisition or establishment of new foreign subsidiaries in Japan
would caused Anheuser-Busch to ma a substantial investment into foreign operations and
the profit made by the venture would not be a sizeable. The route of making a joint
venture with Kirin yields the most profit with the least amount of investment therefore it
maximizes shareholder wealth.
b. The joint venture allowed Anheuser-Busch to limit risk by not putting up any
capital. Anheuser–Busch limited risk because it did not put up any capital to conduct
business in a foreign country. If there is a decline in the sale of Anheuser-Busch beer in
Japan, the firm can easily discontinue this pair of its business at a low cost.
c. Anheuser-Busch will not have to focus on establishing itself in a foreign market
since they decided to conduct a joint venture and utilize the brewery already established
by Kirin. Kirin in turn will circumvent the barrier of attempting to operate in a foreign
