By entering into a joint venture with a larger company with more financial resources, the small business can expand more quickly. Small businesses often face having limited resources and access to capital for growth projects. A common joint venture arrangement is one between a company headquartered in country “A” and a company headquartered in country “B” that wants to obtain access to the marketplace in country “A.” With the formation of the joint venture, the companies are able to expand their product portfolio and market size, and the country B company obtains easy access to the marketplace in country A. New market penetrationĪ joint venture may enable companies to enter a new market very quickly, as all relevant regulations and logistics are taken care of by the local player. Technical expertise and know-howĮach party to the business often brings specialized expertise and knowledge, which helps make the joint venture strong enough to move aggressively in a specified direction. Shared expensesĮach party shares a common pool of resources, which can bring down costs on an overall basis.

Shared investmentĮach party in the venture contributes a certain amount of initial capital to the project, depending upon the terms of the partnership arrangement, thus alleviating some of the financial burden placed on each company. It can help a business grow faster, increase productivity, and generate additional profits. The profit and loss from the venture are shared by the participants.Ī joint venture offers several advantages to its participants. The JV may be a new project with similar products or services, or it may involve creating an entirely new firm with different core business activities.Ĭompanies initiate a JV through a contractual agreement between all concerned parties. Companies often enter into a joint venture to pursue specific projects. Updated FebruWhat is a Joint Venture (JV)?Ī joint venture (JV) is a commercial enterprise in which two or more organizations combine their resources to gain a tactical and strategic edge in the market.

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