Joint Venture is a foresight process in which two or more parties come together in order to expand their business wings and profit and in order to minimize the risk involved in performing business activities. Joint Venture is not only a sharing idea of cost involved in a business but sharp investors use this as a doubling tool of expertise and profit because they choose their co-venture partner in such a way that he will not only add money in his business but also use his expertise and knowledge to take this venture forward.
Steps for Joint Venture
1) First identify the objective of Joint Venture.
2) Write down the outcome of Joint Venture.
3) Analyze the target segment where you want to reach.
4) Identify the potential partner who already in the same segment.
5) Than DO SWOT analysis of those prospects and firm.
6) Determine the type of your joint venture.
7) Design your expansion plan and budget.
8) Then finally move ahead for final negotiation or discussion.
Benefits of Joint Venture
Joint Venture is a tool to diversify the risk involved in performing business activities. Each partner comes in with a capital and expertise so as to enhance the value of the entity and its operations. Its a mutually agreed contractual agreement between parties in order to complete a specific task or project.
A Joint Venture can benefit in the following ways :
1) Newer Markets and Distribution Networks will be tapped
2) Increased Capacity
3) Diversification of associated risk
4) Expertise such as improved technology, specialized staff will be at the disposal
5) Greater profits
Reasons for Joint Venture
1) Expands your clientele. From a list-building perspective, a good JV will give you exactly what you want: a (fast) new audience of people in your target market.
2) Increases your credibility to your community. Yesterday’s expert paradigm is long gone – today instead of broadcasting your message it is much more valuable to rub elbows with other experts in your niche.
3) Divides the costs. You and a JV partner can share costs associated with marketing, and other expenses, reducing your financial burden.
4) Strategic move towards competitors. A joint venture may be able to better compete against other industry leaders through the combination of markets, technology, and innovation.