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Question

In 2005 Elharti and Airtel joined their hands and proved that they are the biggest players in the telecom sector. Identify this example is related to which type of enterprises. Elaborate its concept and features in your own words.

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Solution

In 2005 Bharti and Airtel joined their hands and proved that they are the biggest players in the telecom sector. This is an example of a joint venture where two or more individuals or enterprises, either private or government, owned or a foreign company joining together through participation in equity capital for achieving a common target and mutual benefit.

Features of Joint Venture are :

(i) It involves pooling of resources and expertise as well as sharing of risks and rewards by these enterprises.

(ii) These enterprises agree to join together for the expansion of business, development of new products or for penetrating into new foreign markets.

(iii) It results in reducing the competition as instead of wasting resources in competition they will strengthen their organisation.

(iv) Joined companies can operate on a large scale and get the benefit of economies of scale hence reduces cost of production and marketing.


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