Joint Ventures are entities formed between two or more parties in order to undertake economic activity together, kind of like a partnership. Here both or all parties have to agree to contribute equity and share revenue, expenses and pretty much control of the business.
Now why are Joint Ventures so popular? Well if you know what you are doing, then you can be as big as Sony Ericsson. See, Sony Corporation, which is Japanese, and Ericsson, which is Swedish, decided to put their best feet forward and together establish a joint venture. Sony had consumer electronics expertise and Ericsson had technological leadership in the communication sector, equaling great business which we all see.
That isn’t the only reason Joint Ventures are made. Companies go in to Joint Ventures for many reasons from financial reasons to avoiding risk. Here are some other reasons companies go in to joint ventures:
1. Internal reasons – It’s impossible to have a perfect business, so sometimes it’s better for a company to join another in order to build on its strengths and have fewer weaknesses. A Joint Venture is also good for spreading costs and risks, so everything is not on you. It can help you in getting access to financial resources, expansion, new technology and customers.
2. Competition – You can completely evolve the way things are done so you’re more in the market and you have a larger standing. Instead of having on team, it’s like you’re playing with two. You can use each others expertise to come up with better services or products just like Sony Ericsson.
3. Strategy – Simply a company strategy for concerns with synergies, transfer of technology or skills and diversification.
Joint Ventures are not only for the big boys, it can be between small businesses as well. All that matters is that the two parties fill in each others empty spaces, like a marriage, and when you do things right then you can grow old together.
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- Rivers Corbett
- Rivers Corbett, MBA is an award winning entrepreneur, speaker, and author of "13 Fears of Entrepreneurs" He has received numerous business honors including Entrepreneur of the Year, Canada's Hottest Start-ups List and Canada's Fastest Growing Companies list through Profit magazine and most recently recognized as one of Canada's 10 Mentor RockStars.. Rivers is presently a member of Startup Canada's National Advisory Council, founding entrepreneur of StartUP Fredericton & the "Entrepreneur in Residence" at the University of New Brunswick. His real joy and expertise is being a StartUP Advisor and "zagging while everyone else zigs"...like his two newest businesses ventures the Relish Gourmet Burgers restaurant chain and TheRockStar StartUP for StartUP entrepreneurs. Oh... he is also the leader of a team of over 25 chefs through his other company The Chef Group. Not bad for a guy who hates to cook. Always looking for a new idea to help businesses' succeed...this is his newest marketing discovery for StartUPs The Lyoness Advantage. "Rivers is a 21st century entrepreneur, he's the one to watch" - Jim Gilbert: Canada's Huggable Car Dealer!