The vertical joint venture is when two companies need the same supply of raw material. It would save the fleeting and storage cost of both businesses. Both of them join hands and solve their inventory management issues. It’s to create a symbiotic environment that would beneficial for both.įor instance, a company has an extra storage space and the other business has a fleet of transport. It is when different categories of businesses having expertise in different fields make an alliance. Both parties create a contract and outline the terms and conditions of the projects that how the thing would work out. For instance, a business enters into a new market and partners up with the local distribution network channels. Some of the main types are as follows Project Joint VentureĪs the name implies, this type of venture is limited to a specific project and completion of it. There are various types of joint ventures for different types of businesses because they all want to achieve a different goal. Minor can also enter into the partnership, and Partnership Act regulates partnerships. They create and maintain a separate set of accounting books. Partners give a name to their business, profit from it annually. The partnership isn’t limited to a specific project. It’s a co-venture, results in the form of profit and loss, doesn’t require maintenance of account books, and businesses think of it in terms of liquidation. They should also agree on the non-disclosure agreement to secure commercial secrets, insurance, and indemnification (if one partner harms the other).Īlso Read: Integration strategy – Definition, Types & Examples Joint Venture Vs Partnershipīusinesses firms go on a joint venture strategy to work on a specific project.In case of dissolution and liquidation of the venture, how they should exit and finish the venture.How the partners should resolve their dispute and conflict of interest.The distribution of liabilities and losses.The percentage of sharing of profit among partners in the form of cash or dividend.The role, management, control, and responsibilities of partners.The share of ownership of intellectual property among partners developed by the joint venture.
How many employees and asset each business would contribute.In case of withdrawing capital, the partners have the permission or not.How much cash and capital each partner would contribute, and the total capital venture would make.Terms and conditions that how long it would be durable.How the structure of the joint venture is going to be in terms of whether it would be a separate entity, or not.It defines the roles, rights, and responsibilities of the partners.
VENTURE DEFINITION HOW TO
Now the question is how to create a legal contract and agreement for a joint venture. When you have the knowledge and expertise, then you should all the resources at your disposal and make use of it as much as you can. For instance, if you’re planning to start a joint venture with any other business, then you need to focus on how it works in terms of management and taxation.Įvery partner in the venture should learn new marketing tools, and how they could use them to their advantage. When businesses share assets, they also divide income and expenses.Ī joint venture is a separate entity completely different from its individual businesses. It usually results in the form of new business activity.
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