Aubrey's Corner

Pros And Cons Of Joint Ventures

A joint venture is a type of a business organization in which two and more businessmen or firms join together in a temporary partnership. Usually it happens when one party has resources and the other party has financial means and they combine their possibilities. This type of conducting business is very widespread because of its advantages, but there are numerous disadvantages too.

Ventures of this type combine different skills and companies in the venture have access to new technologies and capital. For instance, a well-capitalized company has no experience in the needs of the new market consumers but it wants to penetrate the market and seeks for another company that has necessary knowledge and they launch a joint venture.

Foreign companies can make joint ventures with local businesses and in this way they enter new local markets.

Combining their resources in these ventures, companies share their risks. And in joint ventures partners make decisions together.

But the rewards are divided too and each party can take only a part of the joint venture’s profits. It is good when all parties agree about objectives of such consolidation, but as they have different management style and philosophy, it may lead to poor integration and cooperation and decrease venture’s chances for success.

Thus joint ventures have numerous benefits. You can build long lasting relationships with branded business and beat your competition; have free services and products and deal with little money; you can save time and solve your business problems; your company can survive a financial crisis or depression; you can penetrate other consumer markets and grow your business quickly; you can get necessary information and skills and find new profit outlets and so on and so forth.

You can have and do all these but only if you are dealing with the right people. If not – your joint venture will not be successful.

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