joint venture
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Joint venture
Joint Venture
joint venture
joint venture
a business owned jointly by two (or more, in some cases) independent firms who continue to function separately in all other respects but pool together their resources in a particular line of activity. Firms set up joint ventures for a variety of reasons. The combining together of the resources of the two firms may facilitate the establishment of a larger-scale operation giving the joint venture access to economies of scale and increasing its penetration of the market. A joint venture is often a particularly effective way of exploiting complementary resources and skills, with one firm, for example, contributing new technology and products and the other providing marketing expertise and distribution channels. In the international context, joint ventures with local partners are often used by MULTINATIONAL ENTERPRISES as a means of entering unfamiliar foreign markets (see FOREIGN MARKET SERVICING STRATEGY).Joint ventures are usually a less expensive way of expanding a firm's business interests than undertaking full mergers and takeovers (see EXTERNAL GROWTH); and they also allow firms to withdraw from a particular activity more easily (see DIVESTMENT). The main problem with joint ventures centres on the need to secure agreement between the two partners (especially if it is a 50 – 50 arrangement) as to how the business should be managed and developed. See BUSINESS STRATEGY, STRATEGIC ALLIANCE.
joint venture
a form of STRATEGIC ALLIANCE in which a business is owned jointly by two or more independent firms that continue to function separately in all other respects but pool their resources in a particular line of activity. Firms set up joint ventures for a variety of reasons. The combining of the resources of the two firms may facilitate the establishment of a larger-scale operation, giving the joint venture access to ECONOMIES OF SCALE and increasing its penetration of the market. A joint venture is often a particularly effective way of exploiting complementary resources and skills, with one firm, for example, contributing new technology and products and the other providing marketing expertise and distribution channels. In the international context, joint ventures with local partners are often used by MULTINATIONAL COMPANIES as a means of entering unfamiliar foreign markets.Joint ventures are usually a less expensive way of expanding a firm's business interests than undertaking full mergers and takeovers (see EXTERNAL GROWTH). The main problem with joint ventures centres on the need to secure agreement between the two partners (especially if it is a 50–50 arrangement) as to how the business should be managed and developed.
joint venture
A legal entity somewhat similar to a partnership,except that its purpose is the pursuit of a single transaction for the mutual benefit of both joint venturers. Each joint venturer has equal rights of direction and control. For tax purposes, the joint venture is treated as a partnership and must file a partnership tax return.