A Joint Venture is a legal organization that takes the form of a short term partnership in which the persons jointly undertake a transaction for mutual profit. Generally each person contributes assets and share risks. Like a partnership, joint ventures can involve any type of business transaction and the “persons” involved can be individuals, groups of individuals, companies, or corporations.
Joint ventures are widely used by companies to gain entrance into foreign markets. Foreign companies form joint ventures with domestic companies already present in markets the foreign companies would like to enter. The foreign companies generally bring new technologies and business practices into the joint venture, while the domestic companies already have the relationships, existing markets and requisite governmental documents within the country along with being entrenched in the domestic industry.
Joint Ventures are possible at private level, public sector level and also at government level. The intension of entering into joint venture is to undertake large industrial projects involving huge capital investment with the co-operation of reputed companies from abroad.
CHARACTERISTICS / FEATURES OF J.V.
- Wider concept compared to collaboration
- Coming together of 2 companies
- In order to promote a new business activity for mutual benefit.
- Facilitates inflow of capital and technology
- From developed country to developing country.
- benefits both partners
- facilitates industrial growth
- government approval necessary
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