Question

Write short answer to the followings.

State the benefits of Joint venture.

Answer 1

The following are the major benefits that a firm derives by entering into a joint venture:

i. Better growth- In a joint venture, the resources and the operational capacities of the individual organizations are pooled together. This enables them to grow and expand in a better way.

ii. Wide market reach- Entering into a joint venture with units in different regions widens the market base of each individual enterprise.

iii. Benefit from cheap labour- Foreign companies entering into joint ventures with companies in the developing countries can take advantage of large and cheap availability of labour.

iv. New technology- A joint venture, especially with a foreign partner, gives the local partner access to new ideas and technology; this in turn promotes the innovation of new products. This further helps the businesses to grow and expand.