Unique Indian products have big markets across the globe. For example, when an organization of United States of America enters into a joint venture with another organization based at India, then the company of United States has an advantage of accessing vast Indian markets with various variants of paying capacity and diversification of choice.Īt the same time, the Indian company has the advantage to access the markets of the United States which is geographically scattered and has good paying capacity where the quality of the product is not compromised. When one organization enters into joint venture with another organization, it opens a vast market which has a potential to grow and develop. Access to New Markets and Distribution Networks This gives the competitive advantage to both the organizations to generate economies of scalability. The strength of one organization can be utilized by the other. Joint Venture helps the organizations to scale up with their limited capacity. Apart from that, there is no separate law for governing joint ventures. Once they are into a corporate structure, then the Ministry of Corporate Affairs in association with Registrar of Companies keep a check on companies. No Separate LawsĪs for joint venture, there is no separate governing body which regulates the activities of the joint venture. So the risks and rewards pertaining to the activity for which the joint venture is agreed upon can be shared between the parties as decided and entered into the legal agreement. In a typical joint venture agreement between two or more organization, may be of the same country or different countries, there are many diversifications in culture, technology, geographical advantage and disadvantage, target audience and many more factors to overcome. These companies can work on economies of large scale to give cost advantage. These two companies can enter into a joint venture to generate synergies between them for a greater good. Similarly, the other company has some advantage which another company cannot achieve. One company may possess a special characteristic which another company might lack with. Creates SynergyĪ joint venture is entered between two or more parties to extract the qualities of each other. (Source: globalcompliancenews) Characteristics of a Joint Venture 1. These norms help the governments to keep a check on the activities of the organizations and ensure a legal activity is conducted by the organizations in Joint Venture. In this case, the directives issued by the respective governments have to be followed before entering into any kind of Joint Venture. Two organizations of different countries can also undergo a Joint Venture to conduct a business. The agreement also helps to designate the actual scope of work which either of parties has to conduct. This aids in clarification and don’t allow any ambiguity between the stakeholders. The agreement between the companies should have detailed terms and conditions with respect to the activities that will be carried by them. Types of Companies and Forms of Organising Public SectorĪ joint venture can be very flexible which can be in context to the requirements of the organization.Browse more Topics under Private Public And Global Enterprises The major joint ventures in India were done in sectors like Insurance, Banking, Commercial Transport vehicle, etc. In India, many companies underwent joint venture with various foreign companies, which were either technologically more advanced or geographically more scattered. It can be a private company, public company or even a foreign company. In short, when two or more organizations join hands together for creating synergy and gain a mutual competitive advantage, the new entity is called a Joint Venture. Joint Ventures can be with a company of same industry or can be of some other industry, but with a combination of both, they will generate a competitive advantage over other players in the market.
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