Alternatively, you can create a separate joint venture, possibly a new company, to fulfill a particular contract. A joint venture like this can be a very flexible option. The partners each own the company`s shares and agree on how it will be managed. Frequent use of television involves working with a local company to enter a foreign market. A company wishing to expand its distribution network to new countries can validly enter into a joint enterprise agreement to supply products to a local company, thus taking advantage of an existing distribution network. Some countries also have restrictions for foreigners entering their market, so a JOINT with a local unit is almost the only way to do business in the country. Joint ventures are particularly popular with transport and travel companies operating in different countries. If you decide to start a joint venture, it can help your business grow faster, increase productivity and generate higher profits. Joint ventures often allow growth without the need to borrow funds or seek out outside investors. You can also use your joint venture partner`s customer database to market your product or offer your partner`s services and products to your existing customers. The joint venture partners also benefit from their power to join forces in purchasing, research and development forces. In order for you to be able to decide which form of joint venture is best for you, you should consider participating in administration.
You should also think about what might happen if the business goes wrong and how many risks you are willing to accept. It is important to review your business strategy before entering into a joint venture. This should help you define what you can realistically expect. In fact, you may decide that there are better ways to achieve your business goals. Check out our guide to evaluating your growth options. A joint venture can use the combined resources of both companies to achieve the company`s objective. One company could have a well-established manufacturing process, while the other company has superior distribution channels. In order to create a joint venture, the two companies enter into a contract specifying the objectives of the joint ventures and the responsibilities of both parties.
Once the agreement is established and signed by both parties, each company is able to claim its share of the company`s profits and the two organizations share mutual control. An enterprise contract may be terminated if the contract has a language allowing it to perish within a specified period of time or if a mutual decision is made to terminate the contract. Creating a joint venture can be a significant change for your business. As beneficial as it is to your growth potential, it must adapt to your overall business strategy. Sony Ericsson is another famous example of joint between two large companies. In this case, they joined forces in the early 2000s to be a world leader in mobile telephony. After several years as JOINT, the company eventually became solely owned by Sony.