A joint venture is a business arrangement where two or more parties pool their resources for a specific project or business activity. In a joint venture, each participant shares in profits, losses, and costs of the venture, which operates as a separate entity from the participants' other business interests. Joint ventures can be domestic or international. They allow partners to share financial resources, reduce business risks through diversification, achieve economies of scale, and directly manage functional activities. However, joint ventures also carry investment risks and potential conflicts around profit sharing, use of shared technologies, and management difficulties.

1. Presentation By: Yogesh
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2. A business arrangement in which two or more parties agree to
pool their resources for the purpose of accomplishing a specific
task. This task can be a new project or any other business activity.
In a joint venture (JV), each of the participants is responsible for
profits, losses and costs associated with it.
However, the venture is its own entity, separate and apart from
the participants' other business interests.
A JV can be Domestic or International.
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3. Parent
Company- A
Parent
Company-B
Child Company
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4.  Financial Resources can be shared
Fund can be generate together for bigger investment
 Reduction of Business Risk
A JV allows Investor Diversification
A JV reduces Local Friction
 Economies Of Scale
A JV can be used to reduce Fixed cost per Product
 Control Over Functional Activities
A JV allows for direct Management of Business Activities
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5.  Sharing Technology and Management skills
The Competitive strengths of two parties can be combined
Higher profitability
 Market Penetration
A local JV partner knows the market
Rapid sales growth
 Host Country Incentives
Economics incentives add value to JV
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6.  Investment risk. although initial investment in JV need not necessarily
be high.
 JV Profits are shared
Conflict could be there in cash distribution
 Shared Technologies can be used beyond the JV
 The management Process may be fraught with difficulties and
conflicts (which happen more often in JV)
 Local Management of an JV can be an unknown
 The possibility that JV may have over estimated as a form of
international business activity.
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7. Risks for an International JV may be classified as
Partner Risks
Venture Risks
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8. * Compatibility
* Functional skills and resources
* Managerial resource
* Facilities and administrative support
* Governmental relations
* Financial resources
* Reputation in the market
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9. * Political risks
* Venture maturity risks
* Currency risks
* Local business risks; labor cost, manufacturing cost. Strengths of
labor unions etc.
* Legal risks; judicial system effectiveness, law enforcement etc.
* Enforceability of contractual safeguards and joint venture
documents
* Selection of entity as risk without proper research.
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10. * IJV is a efficient and cost effective ways to enter foreign markets.
* It allow companies to share risks and exploit synergies with partner
companies.
* A IJVs can provide access to unique business opportunities and new
geographic markets that may not otherwise be available, especially to
smaller and medium sized businesses.
* Companies should be aware of the limitations and risks inherent in the
IJV, and they should take advantage of some of the painful lessons
learned over the years.
* A careful planning, a thoughtful structure and a willingness to remain
flexible during the life of the venture are critical to increasing the
chances of success.
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