Forms of Business Organization - Joint Venture

Forms of Business Organization:
Partnership
Joint Venture
Instructor: Solmaz Huseynova

Student: Rasul Turabov
Definition of Partnership
 Where two or more people combine their resources in a
business, their relationship will probably be considered a
partnership and it is wise to prepare a partnership
agreement setting out the terms of the business. If
partners do not enter into a formal partnership
agreement, their relationship will be governed by the
Partnership Act. A partnership agreement is important if
there are only two partners because without an
agreement, if one partner dies then the partnership
automatically dissolves which may lead to adverse tax
consequences.
The advantages and disadvantages
of the Partnership
The advantages of a partnership are that it is simple
and inexpensive to set up and operate and there are
possible tax advantages. People often enter into a
partnership until they determine how successful the
business will be and then review whether they
should incorporate.
The disadvantages of a partnership include that

each partner will be personally liable for the debts
and obligations of the partnership, and will be
bound by the acts of the other partners in
connection with the business of the partnership.
Definition of Joint Venture
 A contractual agreement joining together two or more
parties for the purpose of executing a particular business
undertaking. All parties agree to share in the profits and
losses of the enterpise.
 A joint venture is similar to a partnership but is generally
limited to a single project. It involves two or more parties
combining their expertise, services and other resources
for a limited purpose and usually for a limited time. One
advantage of a joint venture is the ability to designate, by
contract, differing levels of obligation and commitment
between the parties and to separate business interests
both during the joint venture project and after its
completion.
 A joint venture is a contractual business undertaking between
two or more parties. It is similar to a business partnership,
with one key difference: a partnership generally involves an
ongoing, long-term business relationship, whereas a joint
venture is based on a single business transaction. Individuals
or companies choose to enter joint ventures in order to share
strengths, minimize risks, and increase competitive
advantages in the marketplace. Joint ventures can be distinct
business units (a new business entity may be created for the
joint venture) or collaborations between businesses. In a
collaboration, for example, a high-technology firm may
contract with a manufacturer to bring its idea for a product to
market; the former provides the know-how, the latter the
means.
 A joint venture has as its basis a contractual relationship
between parties who intend to associate themselves as
joint ventures, with each contributing to a common
undertaking for a share of profits or losses and each
having some degree of management control over the
venture. However, the parties must be careful not to
agree to carry on business together or they may find that
they have formed a partnership rather than a joint
venture. The parties should contract in a manner that
does not involve the parties being identified as a
combined entity, where either party is permitted to act
for or on behalf of the other.
 Much of the law of partnership is nonetheless
applicable to joint ventures.
of the Joint Venture
 What are the Advantages of forming a Joint Venture? Provide
companies with the opportunity to gain new capacity and expertise
 Allow companies to enter related businesses or new geographic
markets or gain new technological knowledge access to greater
resources, including specialised staff and technology sharing of risks
with a venture partner
 Joint ventures can be flexible. For example, a joint venture can have
a limited life span and only cover part of what you do, thus limiting
both your commitment and the business' exposure.
 In the era of divestiture and consolidation, JV’s offer a creative way
for companies to exit from non-core businesses.
 Companies can gradually separate a business from the rest of the
organisation, and eventually, sell it to the other parent company.
Roughly 80% of all joint ventures end in a sale by one partner to the
other.
of the Joint Venture
 The Disadvantages of Joint Ventures
 It takes time and effort to build the right relationship and
partnering with another business can be challenging. Problems are
likely to arise if:
 The objectives of the venture are not 100 per cent clear and
communicated to everyone involved.
 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 enough leadership and support in the
early stages.
 Success in a joint venture depends on thorough research and
analysis of the objectives.

How to Get a Joint Venture Started
 The first step to creating a joint venture is to set your goals and decide what
you want your joint venture to do. If you need help getting started with this,
look at the four things a joint venture can do that I've listed at the beginning
of this article, pick one, and then develop a goal that is as specific as
possible.
 Then it's time to look for the like-minded - people or firms that might be
interested in the same goal or goals you want to pursue. Look in the
business groups you already belong to, both in person and virtually. Use
your social networking connections. Study business listings in the phone
book or on Web sites to find those that might share your goals.
 And be open to being asked. Once you start talking to other people about
what you might do together, a joint venture idea you haven’t even thought
of might pop up - one with a lot of potential.
 Once you've found the people to share in a joint venture, be sure to have it
all put into writing in a joint venture agreement. I strongly recommend
hiring a legal professional to do this.
Summation
Joint ventures have become a necessity in almost all
the sectors of an economy. Though the joint
ventures advantages are plenty, it is advisable to
consult legal experts before you go ahead with the
joint venture plans.
So instead of dismissing an opportunity as out of
your reach, start thinking instead about how you
could participate with a joint venture. Properly
planned and executed, joint ventures can help your
small business go where it's never been able to go
before.
Thank You

Forms of Business Organization - Joint Venture

Uploaded by

Copyright:

Available Formats

Forms of Business Organization - Joint Venture

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Forms of Business Organization - Joint Venture

Uploaded by

Copyright:

Available Formats

Forms of Business Organization:

Instructor: Solmaz Huseynova

The disadvantages of a partnership include that

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.