different cultures and management styles result in poor integration and cooperation.there is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners.the partners have different objectives for the joint venture.the objectives of the venture are not 100 per cent clear and communicated to everyone involved.Joint venture - benefits and risksīusinesses of any size can use joint ventures to strengthen long-term relationships or to collaborate on short-term projects. See the page in this guide on how to create a joint venture agreement. You need a clear legal agreement setting out how the joint venture will work and how any income will be shared. It also affects your liability if the venture goes wrong. The way you set up your joint venture affects how you run it and how any profits are shared and taxed. It's worth taking legal advice to help identify your best option. You should also think about what might happen if the venture goes wrong and how much risk you are prepared to accept. To help you decide what form of joint venture is best for you, you should consider whether you want to be involved in managing it. You might even decide to completely merge your two businesses. For example, you could form a business partnership. In some circumstances, other options may work better than a business corporation. The partners each own shares in the company and agree on how it should be managed. A joint venture company like this can be a very flexible option. The two partners could agree to a contract setting out the terms and conditions of how this would work.Īlternatively, you might want to set up a separate joint venture business, possibly a new company, to handle a particular contract. For example, a small business with an exciting new product might want to sell it through a larger company's distribution network. One option is to agree to co-operate with another business in a limited and specific way. How you set up a joint venture depends on what you are trying to achieve. Make your joint venture relationship work.Choosing the right joint venture partner.Assess your readiness for a joint venture. ![]() How can you monitor performance and continue effective and honest communication with your partner? What will make or break the venture? Consider how you’ll operate in a different culture ![]() Step 3: Manage the overseas joint ventureĬonsider these points in the ongoing management of the joint venture: Take independent, specialist legal advice to ensure that the agreement covers all critical issues You should discuss and draft an outline agreement or blueprint. Establish what funding and support you can access. finalise the structure of the venture.Your proposed partner should have the right capabilities, the same agenda and inspire trust and confidence. Step 2: Establish the overseas joint ventureĬonsider these points carefully when establishing the overseas joint venture: ![]() Define what its mission, objectives and scope will be a business plan for the joint venture.A final decision needs thorough research and appraisal Analyse if it makes commercial sense, and if it is practical and affordable the business case for the joint venture. ![]() Step 1: Identify the investment opportunityĬonsider these points to help identify the investment opportunity: To create a joint venture in an overseas market you’ll need to think about the following steps.
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