1. Joint ventures typically entail forming a new corporate entity owned by the partners, whereas strategic partnerships usually can be terminated whenever one of the partners so chooses.
2. In recent years, strategic partnerships/alliances have replaced joint ventures as the favored mechanism for joining forces to pursue strategically important diversification opportunities because they can readily accommodate multiple partners and are more adaptable to rapidly changing technological and market conditions than a formal joint venture.
3. A strategic partnership or joint venture can be useful in at least three types of situations:
a. To pursue an opportunity that is too complex, uneconomical, or risky for a single organization to pursue alone
b. When the opportunities in a new industry require a broader range of competencies and know-how than any one organization can marshal
c. To gain entry into a desirable foreign market especially when the foreign government requires companies wishing to enter the market to secure a local partner
4. However, strategic alliances/joint ventures have their difficulties, often posing complicated questions about how to divide efforts among partners and about who has effective control.
5. Joint ventures are generally the least durable of the entry options, usually lasting only until the partners decide to go their own ways. However, the temporary character of joint ventures is not always bad.
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