A complete explanation of the joint venture that you must know
Have you ever heard the name Joint Venture? This term is very commonly used in the business collaboration of two companies. A Joint Venture is a collaborative relationship carried out between two companies, usually local and foreign companies, to establish business relations that both benefit both parties.
Then, what’s the difference with other Partnerships like Capital Venture (CV)? Let’s look at the discussion more completely!
Definition of Joint Venture.
A Joint Venture is a company that established two or more business entities to make business cooperation agreements within a certain period. Usually, companies that collaborate are local and foreign parties.
When compared to other forms of business cooperation, there is a distinguishing feature that is easy to understand. For example, on the problem of time. The joint venture has a shorter cooperation deadline than CV.
On the problem of the number of parties in collaboration, Joint Venture is greater than a partnership or partnership because it involves two or more combined business entities. While the Partnership only involves one business entity with its two or more founders.
When is the right time to do a joint venture?
If you are a business owner who is thinking about expanding business wings by collaborating with other parties and considering business with a shared capital, then this is the right time for you to do it. Or, if you work with foreign parties in terms of investment, then that’s when the joint venture must be done.
The business that must establish a joint venture
Some types of businesses that must conduct a joint venture company are ports, production, telecommunications, flights, services, trains, drinking water, atomic power plants, and period media.
This must be done by foreign investors to domestic companies. This is because businesses are important to the country and influence the lives of many people.
Meanwhile, some businesses are prohibited from conducting joint ventures such as war equipment, state defense, weapons production, machinery, and blows.
Things that must be considered in the joint venture
Before you start a joint venture, it’s a good idea to pay attention to some important things related to the system:
- Special purpose
Companies involved in Joint ventures must state their goals in the agreement and agreements carried out before cooperation begins.
Between parties working together there must be agreements that are approved in written form, which details the obligation, the ratio of the division of profit and loss, rights, and obligations.
- Certain duration
If the purpose of the cooperation is fulfilled, the parties cooperated are entitled to end the business relationship, unless there has been a previous agreement that states that both parties still collaborate.
In the joint venture conducted, two companies that agreed to collaborate must agree on the distribution of profit ratios. If it doesn’t exist, the profit will be divided equally.
- Business structure
Parties working together to make joint ventures with control in one aspect; Assets, operations, or business entities.
Benefits of Joint Venture.
Collaboration of two business entities with this system brings many benefits, among others:
- Combining resources that automatically increase the potential for business success
- Combining expertise and complementing the strength of the expertise of each business entity
- Save money in running business strategies, such as expenses for advertising, exhibitions, and product publications
Well, for those of you who consider joint ventures for business development, see the good information above. Hope you can be more stable in running a joint venture!
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