A joint
venture is a complex, and sometimes, time consuming process. As any type
business structure, it holds a good opportunity for anyone to grow and make
money fast; but just like any other business type, joint venture also holds
threat to anyone who wants to enter. Discussed below are the advantages and
disadvantages of entering a joint venture.
Advantages of a Joint Venture
Asset sharing is one of the best advantages about joint venture.
Since, you are able to use larger funds to facilitate the production and
operation of projects and products, you facilitate growth. In other words, you
increase profit margin and increase your revenue potential.
Sharing the economic risk with co-venturer :-
Widening economic scope fast :–
Tapping newer methods, technology, and approach you do not have :–
Building relationship with vital contacts :–
Sharing the economic risk with co-venturer :-
It pays to have someone sharing the responsibility with you in
case you end up in deep troubles. This is also true with joint venture. Since you
are sharing assets, the risk of losing a great deal of money is divided to both
parties.
Widening economic scope fast :–
Building reputation is often difficult, not to mention time consuming and
expansive. At a joint venture, you are able to widen your economic scope
without spending too much money and waiting for a long time.
Tapping newer methods, technology, and approach you do not have :–
In order to grow and expand, you
need resources in the forms of methods, technology, and approach. For that
matter, it would help a lot if you will be able to partner with an entity that
presently has the things you don’t and the things you need. Joint venture opens
up the venue for such need.
Building relationship with vital contacts :–
Aside from economic territory, another advantage of joint
venture is the ability to give you business relationships with vital contacts.
This is just like automatically befriending your partner's influential friend
that can give you access to lots of things such as business opportunities and a
pass to vital information.
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