Joint Venture
A joint venture is when two or more businesses team up to create a new project or business.They share the money, share the risks, and share the profits.
Why companies do it
One partner may have money and technology
The other may have local knowledge or market access
Together they can succeed faster than working alone
Example
Many European companies work with Chinese companies.
The European company brings expertise and products
The Chinese partner understands local customers and the market
Together, they make a stronger business.
Advantages
1. Shared risk
Both companies share the losses if the project goes wrong.
2. Shared cost
They split the money needed to start the new project.
3. Access to new markets
One partner may know the local market well — this helps the other company enter easily.
4. New ideas and skills
Each business brings different strengths, making the project better.
5. Faster growth
Working together can help them build and expand more quickly.
Disadvantages
1. Disagreements
Partners may clash on decisions or goals.
2. Profits must be shared
Even if one company works harder, both get a share of the profit.
3. Different cultures
Different working styles or management methods can create problems.
4. Less control
Each company loses some control because decisions are made together.
5. Breakdowns
If trust breaks, the joint venture can fail.