A Joint venture is a business association of two or more persons or organizations to share profit and expenses of a particular business. It can be understood as ‘Temporary Partnership’. They have total control over the enterprise, including share revenues, expenses and assets. In joint Venture, Two parties are agreed upon sharing in the following aspects: -
A joint venture is generally formed to ensure the success of small targets/projects. But Now a day, Big organizations is also involved in such methods to fulfill their common interests.
To prepare a joint venture, there are following decisions to be made if one wants to enter into it: -
- In the new Business JV: - Both parties come together for the sake of combining existing capabilities to create a new business.
- In the consolidation JV: - The value of the alliance comes from the existing businesses.
- In the skills transfer JV: - Business is formed by sharing one’s critical skills.
- In the Co-ordination JV: - The value comes from the strengthening of the complementary capabilities of both partners.
Advantages: There are following advantages of doing business with the formation of Joint venture: