Define Joint Venture and explain its major benefits.
Answers
When two or more parties, whether individuals or entities, enter into an agreement to combine resources for a specific business undertaking, it is referred to as a “joint venture.” The organization of a joint venture serves as a short term partnership for the duration of the project, in which each participant shares responsibility for the project’s associated costs, profits, and losses. Although the parties share responsibility, the joint venture is its own legal entity that remains separate from the parties’ other business interests. To explore this concept, consider the following joint venture definition.
Benefits of a Joint Venture...
Creating a JV provides an opportunity for the parties to benefit from one another’s expertise. Other benefits include:
Enables the parties to offer their customers new products and services
Helps the parties to save money in operating, marketing, and advertising costs
Helps the parties save time
Helps the parties acquire new business associates and referrals
Enables the parties to gain new technological know-how or new geographical market territories
Does not require a long-term commitment