Most companies do not necessarily excel in everything although they are and they should be able to perform competently in certain aspects. The same way that a joint venture can aid in supplying the resources that one business lacks, knowledge and expertise can also be shared when the businesses enter into a joint venture agreement. It shares specialized knowledge and expertise. When resources are pooled this way, this allows the business partners involved to profit from the project.ģ. Resources that can be agreed by both parties to share can include but are not limited to capital, personnel, equipment, facilities or intellectual property such as trademarks and patents. In the same manner, your co-venturers could be looking into your company to supply the resources that they need. If your business company is low on resources or is in need of other means to garner a specific kind of resource that your company does not necessarily specialize on, a joint venture can be advantageous for you as all the parties involved can pool their resources with the intention of accomplishing the task.
Networking in the business industry is incredibly important so to be associated with an established business company and having participated in a collaborative project can definitely gain you a few nods and potential projects that can further boost your business’ reputation giving you access to newer and more expansive markets. Especially if the joint venture is successfully completed, this could produce recognition that small to medium sized companies could definitely benefit from when they’re working with larger companies. If not a new market, it still can expand your business to the same market you are targeting but could not reach due to the limited resources your business could allocate for marketing. The main distinction lies with the duration of the collaboration since a joint venture is only a temporary partnership intended for a single purpose whereas a partnership engages in business continuity and can usually last for many years.īut when exactly can a business say they need to collaborate with other business entities? We list some of the most common reasons why embarking on a joint venture is an option taken by businesses.įorming alliances with other business companies can expand your reach to a newer and more diversified market. It is not to be confused with a business partnership although they are similar in many ways and especially since a joint venture can be considered as a kind of partnership. Most joint ventures are formed when there is an intent to break into a foreign market or combine two or more parties’ performance. Cooperation here could entail sharing assets, resources, property, knowledge, skills and experience in order to undertake a specific goal for a certain period of time that is mutually beneficial to the business entities involved. When is a Joint Venture Appropriate?Ī Joint Venture (JV) is a business agreement embarked by two or more businesses cooperating together for a common goal of pursuing a new project. Securing a joint venture contract will govern the operational plans that the parties can employ which in turn would allow them to better control the direction of the business venture and reassure them of what can be done.Īn important item of a joint venture contract like most contracts is the length that the contract will take effect since a joint venture only lasts for a certain period of time or until a project is completed. The contract shall also outline the contributions that shall be made in order to meet the established expectations. Moreover, it instructs the business parties of what they must be able to do, how they should perform, and what they are prohibited from doing otherwise, penalties will have to be incurred and it could usually be in the form of fees.
#Sample of joint venture agreement download#
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