![]() The party that belongs to the locality takes care of the marketing and logistics which otherwise could have been a huge challenge for other parties that do not belong to the respective locality. Exploring New Markets:Ī JV brings forth businesses a plethora of opportunities to enter new markets at a lightning speed. This would make the Joint Venture Agreement strong enough to withstand the competition in the market 4. The parties involved often have their own expertise and each of them brings their specialised knowledge to the table to institute the JV together. Sharing of costs could greatly enable the parties to establish and launch the business at a faster pace 3. The parties share a common reserve of supplies which can reduce the overall costs involved. This would undoubtedly alleviate the financial burden falling on a single party 2. The amount depends on the terms of the contract signed by the parties. The parties of a JV contribute a certain amount of the initial investment to develop the project. Additionally, a JV could also present several other benefits as elucidated below: 1. This is one of the major reasons corporates enter into JVs. By participating in a JV, the parties can share the risks, rewards, and liabilities of the venture. The parties concerned typically pool their resources and expertise and undertake a project which otherwise would not have been possible to have carried out on their own. In this blog we’ll know the advantages of Joint Venture. The agreements also delineate the other terms and conditions of the relationship, the roles and responsibilities of the parties concerned, the costs to be borne by each of them, and the business structure of the venture. The profits and losses that occur are eventually shared by the parties as stipulated in their contracts. These business deals are effectuated by means of contractual agreements between the parties entering the JV. Most often a JV is a temporary partnership that comes into existence for executing a specific business deal. The JV may be formed to carry out a proposal with identical products or services or it may be related to an entirely new project with completely different core business activities. Companies often join hands in a JV to accomplish specific projects. These establishments that join hands together for effectuating a business goal are said to be in a Joint Venture.Ī commercial enterprise between two or more organisations that come together to combine their resources to develop a strategic edge in the market is called a Joint Venture. Such establishments definitely have more to gain than lose by virtue of their relationship. Some policies may be allowed in one country but not in the other to slow down the business.Commercial enterprises enter joint alliances to accomplish a specific purpose by sharing their resources. You may require the services of a translator, making it difficult to carry out interaction. There are always language and cultural barriers in a JV if the language spoken in the partner’s market is different. Differences in cultural values and work ethics play a part in perceptions and partners may get annoyed quickly because of these differences. The gap in communication is often a culprit in the development of conflicts in a joint venture.Įven though the goals and responsibilities are clearly defined in a joint venture, there are always commitment issues levelled at each other by the partners. There is no single owner with full control and disputes may arise over management policies, long-term vision, and handling of capital. In a joint venture, it is easy for conflicts to arise between partners. Shared resources mean the business can be started with fewer resources than are required from a single owner.Ĭonflicts may arise over a period of time You don’t have to worry about the staff and the equipment that is arranged by your partner. In joint ventures, different partners bring to the table their own strengths and weaknesses. Shared resources increase chances of success Similarly, you can negotiate with your JV partner on the issue of costs and risks so that you don’t have to bear the cost completely if the project fails in the future. In a JV, the roles and responsibilities of both partners are clearly defined. In a JV, the outsider partner gets the advantage of the customer base of the partner to grow and expand quickly and easily. ![]() It is very difficult for a new company to make forays into a new market without spending money on large scale advertising. In a joint venture, a company gets the advantage of the already existing customer base of the partner. You can tap the customer base of your partner
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