What is a Joint Venture?

Shannon Kietzman

A joint venture takes place when two parties come together to take on one project. In this type of project, both parties are equally invested in the project in terms of money, time, and effort to build on the original concept. While joint ventures are generally small projects, major corporations also use this method in order to diversify. Working in this way can ensure the success of smaller projects for those that are just starting in the business world or for established corporations. Since the cost of starting new projects is generally high, a joint setup allows both parties to share the burden of the project, as well as the resulting profits.

A partnership is a legal entity, which is generally set up under specific governing regulations and is registered with a governing body.
A partnership is a legal entity, which is generally set up under specific governing regulations and is registered with a governing body.

A joint venture is not to be taken lightly. For a businessperson to embark on one, he or she needs to be committed and willing to work cooperatively with the other party involved. A person involved in this type of agreement can no longer make all of the decisions for the business alone. For it to be truly a joint project there has to be 100% commitment from both sides.

Ultimately, short term and long term successes are both important in a joint venture.
Ultimately, short term and long term successes are both important in a joint venture.

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When determining whether or not to embark on a joint venture, it is important to ensure both parties are a match with the projected client base. Each party should be able to complement the other in business. Sometimes, a misunderstanding or a lack of communication can destroy a joint venture. Therefore, it is necessary for both parties to be capable of communicating what they are able to offer to the project and what their expectations are.

Since money is involved in a joint venture, it is necessary to have a strategic plan in place. In short, both parties must be committed to focusing on the future of the partnership, rather than just the immediate returns. Ultimately, short term and long term successes are both important. In order to achieve this success, honesty, integrity, and communication are necessary.

A joint venture takes place when two parties come together to take on one project.
A joint venture takes place when two parties come together to take on one project.

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Discussion Comments

anon82242

The Del Sol store is a joint venture. Does this mean I would need to invest half of my money to open a store.

anon60623

is rupa company a joint venture?

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