What are the benefits of entering into joint ventures and public private partnership?
Answers
Answer:
The benefits of entering into joint ventures are as follows :
Increased resources and capacity of joint venture company :
Joint venture help the company to grow and expand more efficiently with enable the business to face market challenges.
A joint venture with foreign partner, it opens up new markets and distribution networks :
A joint venture with foreign partner enable them to gain access to the vast Indian market. Product of the foreigner can be sold in new markets.
Technology is a big factor to enter into joint venture :
No doubt, advanced technology lead to production of superior quality and save a lot of time and energy of the producer. Hence to enjoy the benefit of new technology firms /person enter into joint venture.
Foreign partner can come up with innovative products :
In the days of tough competition any producer can enter into the market with innovative products. Entering into joint venture make it possible because foreign partner can join hand with innovative products.
Foreign partners gets the product of good quality at a minimum cost :
If any producer extends his scale of production and entered into international market, his cost of production reduced due to huge production. Hence if , foreign partner join hands in the sense of joint venture there is a chance of getting the product of good quality minimum cost.
The benefits of entering into public private partnership (PPP) are as follows :
- In PPP, public and private enterprises, shared the risk of construction and design by working together and hence reduced the risk of projects.
- In PPP , both the enterprises share the work and responsibilities and hence, accelerated the project work and aim to complete the on going project on time.
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Explanation:
While there are a wide variety of joint venture benefits to companies of all sizes, I will focus specifically on how JV’s can be especially advantageous for small- to medium-sized businesses.
It is common for joint ventures to occur between larger organizations and much younger, smaller businesses. By collaborating with a larger company, smaller businesses gain from the expertise of the larger one while increasing their credibility and sharing the financial burden (and profits) of a new venture. There are also many joint venture benefits for JV’s that are conducive to smaller businesses that seek to “join forces” in order to compete with larger corporations.
- Shared costs: Each partner contributes equal amounts of initial capital to the project, alleviating some of the financial burden placed on each company
- Shared expenses: Each partner takes on project-related costs to the project or new business, generally in equal amounts unless otherwise pre-specified
- Shared returns: By sharing upfront costs and expenses associated with the project, JV member are also entitled to share in the returns and profits
- Expertise and knowledge gain: Businesses often bring specialized expertise and knowledge to JV’s that can be shared among members
- Product and intellectual property gains: Critical intellectual property, technology or other resources are often difficult to build in-house. Businesses then enter into JV’s with businesses that possess these resources in order to share access to such assets
- Enhanced credibility: Younger businesses, including startups, as well as small businesses struggle to build market credibility and thus a strong customer base. Forming a JV with a larger, well-known brand can lend the smaller business increased credibility
- New market penetration: In some countries, local regulations preclude foreign companies from entering except through partnering with a local business
- New revenue streams: Small businesses have limited resources and capital for growth projects. By entering into a JV with a stronger, more established partner, the small business can expand its sales force and distribution channels, resulting in larger, more diversified revenue streams
- Shorter learning curve: Building the knowledge and expertise necessary to operate in key target markets is both time-consuming and costly. Partnering with a business that has the specific domain expertise required for entering target markets can allow JV members to reduce the time it would take to develop the expertise otherwise
- Barriers to competition: Collaborating with other companies to drive market penetration builds barriers to competitors that are effectively difficult to permeate
- Larger market reach: Companies with similar or nearly identical products can collaborate via a JV to encompass a larger market reach than they would have previously had access to