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Joint ventures

It is a business alliance between at least two companies with the purpose of achieving a common goal, allowing companies to cooperate and develop their strengths. Joint ventures. Synergy: both parties can specialize in their area of expertise and able to gain new technology and customers

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Joint ventures

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  1. It is a business alliance between at least two companies with the purpose of achieving a common goal, allowing companies to cooperate and develop their strengths. Joint ventures

  2. Synergy: both parties can specialize in their area of expertise and able to gain new technology and customers Spreading of cost and risk: help reduce the financial burden, risks and losses Entry to foreign markets: form an agreement with oversea firms Relatively cheap: method of external growth Competitive advantage: highly unlikely to compete with each other directly.  collective size = further economies of scale and economies of scope can be enjoyed Exploitation of local knowledge: expand internationally = take advantage of each other’s local knowledge and reputation High success rate: parties pool their funs and resources and share responsibility for their mutual benefit • ADVANTAGE

  3. DISADVANTAGE •  It takes time and effort to build the right relationship and partnering with another business can be challenging. • Problems are likely to arise if: • The objectives of the venture are not 100 per cent clear and communicated to everyone involved. • There is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners. • Different cultures and management styles result in poor integration and co-operation. • The partners don't provide enough leadership and support in the early stages.

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