Question

Long answer questions.

What is Joint Venture? Explain its benefits.

Answer 1

A joint venture is a business agreement that allows two or more organisations to collaborate, for a finite time, for mutual benefits and gains.. Business organisations in a joint venture share the available physical, financial and human resources as well as the risks and profits of the business. The following are some of the benefits for a company entering a joint venture:
i. Increased resources and capacity: In a joint venture, the resources and operational capacities of the individual business are pooled. A joint venture is able to expand and grow better than an individual business enterprise.

ii. Access to new markets and distribution networks: Entering a joint venture with an enterprise located in another region widens the market base of each enterprise.

iii. Access to technology: Through a joint venture, a company can acquire new and modern technology more easily with less investment, time and effort compared to the technology that individual enterprises may be able to acquire working independently.

iv. Innovation: A joint venture, especially with a foreign partner, gives a company access to new ideas and technology that help in the innovation of new products. These new products enable businesses to sustain in today’s complex and competitive market.

v. Low cost of production: The costs of raw material, labour, etc., are very low in developing countries compared to developed countries. Thus, international corporations that enter into joint ventures with developing countries reap huge benefits.