Terms in this set (9)

Joint venture Advantages:

• Provides companies with the opportunity to gain new capacity and expertise.
• Enables companies to enter related businesses or new geographic markets or gain access to modern technology.
• Provides access to greater resources – including specialised staff and technology.

Advantages of joint venture access to new markets and distribution networks. increased capacity. sharing of risks and costs (ie liability) with a partner. access to new knowledge and expertise, including specialised staff. access to greater resources, for example, technology and finance.

Advantages of a Joint Venture

• 1 – New insights and expertise.
• 2 – Better resources.
• 3 – It is only temporary.
• 4 – Both parties share the risks and costs.
• 5 – Joint ventures can be flexible.
• 6 – There are ways to exit a joint venture.
• 7 – You will know what’s yours and will be able to sell it.
• 8 – You are more likely to succeed.

The reasons behind forming a joint venture include business expansion, development of new products or moving into new markets, particularly overseas. Your business may have strong potential for growth and you may have innovative ideas and products. However, a joint venture could give you: more resources.

• Advantages of Joint Venture Marketing. – Sharing Assets.
• Sharing Assets. – Share collective tangible and intangible assets in pursuit of a common goal.
• Sharing Critical Expertise and Experience.
• Sharing Costs.
• Sharing Business Risk.
• Access to New Markets.
• Diversification.
• Flexibility.

Advantages of Joint Venture

• Economies of Scale. Joint Venture helps the organizations to scale up with their limited capacity.
• Access to New Markets and Distribution Networks.
• Innovation.
• Low Cost of Production.
• Brand Name.
• Access to Technology.

Features of Joint Ventures

• Specific Purposes. Parties create joint ventures keeping pre-determined purposes in mind.
• Agreement. The parties to a joint venture, i.e. the co-venturers, generally execute a written agreement between them.
• Specific Duration.
• Structure of the Venture.
• Profit Sharing.

One advantage to engaging in a Joint Venture is sharing costs and risks with a local partner that limits risk exposure.

Joint ventures have the advantages of sharing the costs and risks of opening a foreign market and of gaining local knowledge and political influence. Disadvantages include the risk of losing control over technology and a lack of tight control.

A joint venture is an informal type of business relationship wherein two or more parties agree to share funds, resources, and skills to undertake a particular business project. These partnerships are formed with a specific business goal in mind and are generally dissolved once the specific goal has been achieved.

1.Reduces competition : When two companies join together, it results in reducing the competition as instead of wasting resources in competition they will strengthen their organisation. 2.Reduces risk : High risk involved in new and innovative ventures can be reduced when two companies join together to share the risk.

Objectives of Joint Venture To enter foreign market and even new or emerging market. To reduce the risk factor for heavy investment. To make optimum utilisation of resources. To gain economies of scale.

Advantages & Disadvantage of a Joint Venture There are many good business and accounting reasons to participate in a Joint Venture (often shortened JV). Partnering with a business that has complementary abilities and resources, such as finance, distribution channels, or technology, makes good sense.

Companies often enter into a joint venture to pursue specific projects. The JV may be a new project with similar products or services or it may involve creating an entirely new firm with different core business activities. Companies initiate a JV through a contractual agreement between all concerned parties.

The time period that was initially established for the joint venture to operate has been completed, and the parties agree that there is no further benefit to be gained from continuing the venture. The individual objectives of each party are no longer aligned with the common objectives of the JV partnership.

Each of the participants in a joint venture is responsible for the profits, losses, and costs associated with mutual activities. This business effort is also an entity by itself, separate from the other business interests of its founders.