Joint Ventures

The term joint emanates from the word join so in this case when we say joint venture it’s obvious that entities are banding together to make up or to come up with one solid thing.  In this instance we are discussing this on a business perspective we are joining two parts to make up a business.

A joint venture is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses, and costs associated with it. However, the venture is its own entity, separate from the participants’ other business interests.

On the face of it, a partnership and a joint venture would seem to be the same thing. Both involve more than one party getting together for the purpose of undertaking business or some other project. But a partnership is usually only made up of persons, two or more, who form a legally recognized association for the purpose of operating a business. A joint venture, on the other hand, can be individuals or entities such as corporations, or even governments and businesses. It can also be individuals, whereas a partnership is often only individuals.

One company may possess a special characteristic which another company might lack with. Similarly, the other company has some advantage which another company cannot achieve. These two companies can enter into a joint venture to generate synergies between them for a greater good. These companies can work on economies of large scale to give cost advantage.

Joint Ventures helps the organizations to scale up with their limited capacity. Also, when one organization enters into joint venture with another organization, it opens a vast market which has a potential to grow and develop. Joint ventures give an added advantage to upgrading the products and services with respect to technology.

On the other hand the objectives of a joint venture are not 100 percent clear and rarely communicated clearly to all people involved and also An equal pay may be possible, but it is extremely unlikely for all the companies working together to share the same involvement and responsibilities.

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