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BE - Joint Ventures

The document discusses the advantages and disadvantages of joint ventures. Joint ventures involve two or more parties coming together for a specific business undertaking and sharing profits and losses. They allow companies to gain new expertise, enter new markets, and share risks. However, joint ventures also take time and effort to manage relationships between partners and problems can arise if objectives are unclear, contributions are imbalanced, or cultures clash. Success requires thorough planning and support from all parties.

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Mehboob Mandal
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61 views7 pages

BE - Joint Ventures

The document discusses the advantages and disadvantages of joint ventures. Joint ventures involve two or more parties coming together for a specific business undertaking and sharing profits and losses. They allow companies to gain new expertise, enter new markets, and share risks. However, joint ventures also take time and effort to manage relationships between partners and problems can arise if objectives are unclear, contributions are imbalanced, or cultures clash. Success requires thorough planning and support from all parties.

Uploaded by

Mehboob Mandal
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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&

DISADVANTAGES

OF
JOINT VENTURES

NAME:- MEHBOOB MANDAL,


STD:- F.Y.B.M.S,
ROLL.NO:- S-136 ,
SUB:- BUSINESS ENVIRONMENT.
The Joint-Venture concept
DEFINATION:- A contractual agreement joining together
two or more parties for the purpose of executing a
particular business undertaking. All parties agree to share
in the profits and losses of the enterprise.
The term JV refers to the purpose of the entity and not to a
type of entity. Therefore, a joint venture may be a
corporation, a limited liability enterprise, a partnership or
other legal structure, depending on a number of
considerations such as tax and tort
REASONS FOR FORMING JV:
• Reducing 'entry' risks by using the local partner's
assets
• Inadequate knowledge of local institutional or legal
environmen
• perception that the goodwill of the local partner is
carried forward
• In stratagic sectors, the county's laws may not
permit foreign nationals to operate alone
• Access to local resources through participation of
national partner
• access by one partner to foreign technology or
expertise, often a key consideration of local parties
• Incoming foreign exchange and investment.
ADVANTAGES
• Provide companies with the opportunity to gain
new capacity and expertise.
• Allow companies to enter related businesses or
new geographic markets or gain new
technological knowledge.
• Access to greater resources, including specialised
staff and technology.
• Sharing of risks with a venture partner.
• Joint ventures can be flexible. For example, a
joint venture can have a limited life span and only
cover part of what you do, thus limiting both your
commitment and the business' exposure.
• In the era of divestiture and consolidation, JV’s
offer a creative way for companies to exit from
non-core businesses.
• Companies can gradually separate a business
from the rest of the organization, and eventually,
sell it to the other parent company. Roughly 80%
of all joint ventures end in a sale by one partner
to the other.
DIS - ADVANTRAGES
• It takes time and effort to build the right
relationship and partnering with another business
can be challenging. Problems are likely to arise if:
• The objectives of the venture are not 100 per cent
clear and communicated to everyone involved.
• There is an imbalance in levels of expertise,
investment or assets brought into the venture by
the different partners.
• Different cultures and management styles
result in poor integration and co-operation.
• The partners don't provide enough
leadership and support in the early stages.
• Success in a joint venture depends on
thorough research and analysis of the
objectives.

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