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Associate and Joint Ventures - Essay Example

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Associate and Joint Ventures

The reason behind this strategic alliance between the companies is not a single one in fact there are many. Companies engage in these activities to benefit more and reduce the risk involved with competition and failure. Here are a few advantages which the companies seek in order to maintain growth and expansion due to a Venture.
By forming a joint venture a company can easily expand their business and could possibly cover more market share in the market. This is because the company has more resources, greater capacity, a better distribution channel
A joint venture also makes a company more flexible because a joint venture are formed for a limited life span and also it only covers part of company's processes, therefore joint ventures limits both the company's commitment and the business' exposure in the existing market.
Since different businesses have different size of business, therefore by forming a joint venture with a small business with a larger business the smaller business is not able to invest or bring in more assets into the venture as compare to the larger business, this results in an imbalance in the joint venture.
A simple and easy to form venture is a partnership. ...
Due to different corporate cultures and management styles colliding the joint ventures result in poor co-operations, poor integration between workers, bad communication etc
Each member of the venture has different plans to operate the joint ventures which cause conflicts between the members.
By forming a joint venture the business objects and plans are exposed to the other members in the joint ventures which could cause the company to expect competition between the members in the future.
Due bad relationship in the beginning the members of the venture don't provide sufficient leadership which could cause the venture to experience some losses in the start.
Since different businesses have different size of business, therefore by forming a joint venture with a small business with a larger business the smaller business is not able to invest or bring in more assets into the venture as compare to the larger business, this results in an imbalance in the joint venture.
There can be many forms of a joint venture or an association but three basic legal structures can be used, these can be:
1. partnership or limited partnership
2. limited liability company;
3. purely contractual co-operation agreement

A simple and easy to form venture is a partnership. It is the relation which exists between persons carrying on a familiar business. There are also certain mixtures of mediums or arrangements, such as limited liability partnership. However tax and commercial factors may sometimes lead to the use of an unincorporated system, e.g. a partnership or limited partnership, the stream of ventures is mostly between companies or those entities which are recognized well.
The most acceptable ventures are between companies. A company is a generally recognized medium and gives ...Show more

Summary

Joint ventures have become a vital strategic option for many businesses and this fact is mainly due to increased globalization, the increase of modern technology as the means of conducting business, and by far the most important of all improved international travel…
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