Advantages and Disadvantages of Joint Venture

Joint venture is the agreement between two companies to form a separate entity which focuses on a specific market. A company which decides to go for joint venture should keep in mind that joint venture has some advantages as well as disadvantages, let’s look at both of them –

Advantages of Joint Venture

  1. It helps the companies to grow in those areas where the company does not have any expertise and would have failed if it was not for joint venture.
  2. Joint venture can also help the company in reducing the risks which are associated with starting a new business, because if the business does not go as planned than the losses arising out of such business will be shared by both the companies and therefore a company which do joint venture has cushion in that terms.
  3. It also results in better utilization of the resources which company has at its disposal, because there are certain situations when the company has idle resources in terms of men, machines and materials and when the company enters into joint venture it makes sure that those idle resources are used effectively and efficiently.
  4. Joint venture also increases the company reach whether it is in terms of distribution channel, customers, source of raw material etc…..

Disadvantages of Joint Venture

  1. Joint venture does not give the management of the company complete control because the decisions are taken by both the companies and therefore it can create problems if both companies do not agree on some issues.
  2. It is difficult to integrate resources of companies entering into joint venture because both the companies have different policies, culture etc…. and therefore chances of joint venture becoming a success diminishes when two companies from different countries are involved.
1 comment… add one
  • tonette

    this really helped me out. llllloooovvvveeee iiittt

Leave a Comment


Related pages


fifo methodswhat is the difference between shares and debentureswholesale lending definitionppt on merchant bankingmerits and demerits of social mediaadvantages of b2b marketingunitary elasticity of demandassumptions of capmdiscounted cash flow advantages and disadvantagesunbilled accounts receivable journal entryfive categories of price elasticity of demandreducing balance method depreciationdisadvantages of slumsmateriality concept of accountingadvantages of discounted cash flow methodfactoring in financial managementfii meaningwhat is mixed economy in economicsadvantages of dictatorshipadvantage and disadvantages of social mediaadvantages and disadvantages of mixed economy pdfinternational trade advantages and disadvantagesexample of capital reservebenefits of centrally planned economyadvantages and disadvantages of advertisement on televisiondisadvantages of mergersentry for prepaid insuranceadvantages and disadvantages of using social mediacapitalist economy vs socialist economyskim pricing definitionpayback in financedefine process costingadvantages and disadvantages of skimming pricingexplicit cost implicit costbarter trade meaningdefine mixed economy in economicsexamples of current liabilities on a balance sheetdrawbacks of advertisingexplain the capital asset pricing modelconglomerate acquisitionregional rural banks functionsadvantages and disadvantages of online tradingdistinguish between normal and inferior goodsebit financedemerits of social networkingfictitious assetsecs in bankingindirect currency quotepure monopoly economicsdisadvantages of a monopolyconvention of full disclosure in accountingexamples of normal goods and inferior goodsdifference between shopping mall and department storedisadvantages of a joint venturejournal entry for unearned revenuehorizontal analysis vs vertical analysiswhat is capm in financial managementmonopoly oligopolydirect quote currencycost based pricing advantages and disadvantagesconservatism concept accountingskim pricing definitionindirect quotation exampleexamples of unitary demandwhat are the differences between revenue expenditures and capital expenditureslaw of diminished returnsadvantages of socialismwhat are the advantages of a traditional economyperfect competition in economics definitionexamples of assetswhat is monopoly and oligopolyduality concept of accounting