Joint ventures and partnering

Joint venture - benefits and risks

Businesses of any size can use joint ventures to strengthen long-term relationships or to collaborate on short-term projects.

A successful joint venture can offer:

• access to new markets and distribution networks
• increased capacity
• sharing of risks and costs with a partner
• access to greater resources, including specialised staff, technology and finance

A joint venture can also be very flexible. For example, a joint venture can have a limited life span and only cover part of what you do, thus limiting the commitment for both parties and the business' exposure.

Joint ventures are especially popular with businesses in the transport and travel industries that operate in different countries.

The risks of joint ventures

Partnering with another business can be complex. It takes time and effort to build the right relationship. Problems are likely to arise if:

• the objectives of the venture are not totally clear and communicated to everyone involved
• the partners have different objectives for the joint venture
• there is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners
• different cultures and management styles result in poor integration and co-operation
• the partners don't provide sufficient leadership and support in the early stages

Success in a joint venture depends on thorough research and analysis of aims and objectives. This should be followed up with effective communication of the business plan to everyone involved.

Subjects covered in this guide

• Introduction
• Types of joint venture
• Joint venture - benefits and risks
• Assess your readiness for a joint venture
• Plan your joint venture relationship
• Choosing the right joint venture partner
• Create a joint venture agreement
• Make your joint venture relationship work
• Ending a joint venture
• Here's how I made a joint venture successful

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