Question

Long Answer Type Questions: What are the benefits of entering into joint ventures?

Answer 1

Benefits of entering into Joint Ventures are as follows:

1. Since the local partner also contributes to the equity capital of such a venture, the international firm finds it financially less burdensome to expand globally.
   
2. Joint ventures make it possible to execute large projects requiring huge capital outlays and manpower.
   
3. The foreign business firm benefits from a local partner’s knowledge of the host countries regarding the competitive conditions, culture, language, political systems and business systems.
   
4. In many cases entering into a foreign market is very costly and risky. This can be avoided by sharing costs and/or risks with a local partner under joint venture agreements.