DescriçãoA joint venture, defined by Webster’s is an entity formed between two or more parties to undertake an economic activity together. The parties that wish to form this group, though separate at the beginning of the venture, makes agreed upon allowances in work division and economic contributions.
What Is A Joint Venture?
The venture is usually for one specific project only and usually the venture will break once that particular job is done. Sometimes the ventures, if successful, will come together as a continued venture in another line of direction or the venture will follow the same line, but will end when the venture goal ends.
There is equity in states when a joint venture becomes solidified. If there were no equity in states then the joint venture would be called a strategic alliance and the alliance is not as rigid both economically and physically as a joint venture. A joint venture may be a corporation in which duel agreed upon investments in money and time are agreed on or there is a lesser form where one partner will have a limited liability than t he other. The joint venture can be called a partnership, but the legal structure of a partnership would hold each party liable equally in case of civil or criminal litigation.
Joint ventures are common in the gas and oil industry, but they are often done on a much smaller scale. Sometimes two business men will just agree to come together to market a certain product or to do research and development that will benefit both. Joint ventures have a fairly low rate of success if geographic location, communication, and all avenues of business is not planned and implemented from the start. Joint ventures do well in third world countries where the substance of one man cannot compete with the local economy without the assistance of another. In industrial countries, the idea of a joint venture is to use the other partner’s materials, money, expertise, or marketing outlets to further the ambitions of the first partner.