It is an agreement that can take different forms, in particular the joint venture does not require the registration of a new company. What are the advantages and disadvantages of a Joint Venture? The advantages of the Joint Venture are primarily its legal flexibility. For example, regulatory obstacles that complicate access to certain markets. The effect of size may also come into play: some markets will be more accessible to players with a dominant position and enhanced reputations.Īgreements between companies of different nationalities make it possible to remove the obstacles to a new organisation by relying on a local partner. From a commercial point of view, the joint venture can be set up to increase the volume of sales by combining distribution channels. Joint ventures may be motivated by the sharing of or access to strategic resources essential to the continuity of activities, or by the merging of production sites. It may involve pooling technological expertise or patents, with a view to creating a new innovative product, or offering a new service if the companies operate in the same sector. In practice, these synergies can be of various kinds. The search for synergies is one of the main motivations for joint ventures. When and why should you choose a joint venture? This pooling covers a more or less long-term horizon and is based on an agreement concerning the purpose and the resources committed, which may be formalised by a contract, without necessarily giving rise to the creation of a new legal entity. What you need to know - expert insights from Nord France InvestĪ Joint Venture is an association between two or more companies with a common goal to optimise strategic expertise, skills and resources.Guide « How to find the ideal location ».
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