Joint ventures are very good options if you can find the right partner. Both parties have to benefit and the goals and objectives have to be very clear.
Benefits:
1. Allows for sharing of expertise, resources and geographical representation
2. Sharing of risks with venture partner
3. Gaining expertise and capacity (both ways)
4. One of the parties may want to exit from non-core business and sell to the other party. This happens in 80% of the cases.
5. JV can be flexible and for a limited period to cover only the project at hand, thus limiting business exposure and commitment.
Disadvantages:
1. Different cultures and management styles may result in poor integration and co-operation
2. An imbalance of levels of expertise, investment or commitment may cause problems
3. Objectives not 100% clear and communicated to everyone involved
4. partners not providing enough leadership & support in the early stages
A JV has to be thoroughly researched and has to fit in with your overall strategy with 100% commitment from both parties. This is an excellent way for a smaller business to partner with an established entity to get access to existing infrastructure and to acquire the skills and support to grow their business.
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