What is a Joint Venture?

A joint venture is an International alliance project in which two or more parties get involved in the venture through investment.  It is a strategic international development solution for companies that wish to expand their foreign operations, gain access to specialised skills and pool resources for the purpose of accomplishing a new business activity and entry to new markets.  The parties in a joint venture can either be individuals, or entities such as firms or government agencies.  A joint venture (JV) results in the creation of a new company with shares that each of the parties own.  Management and ownership are shared between the JV parties and in most cases manufacturing and marketing are carried out by the local foreign firm rather than the international enterprise (Centinaro, Roncucci, & Vantyghem, 2019).  The creation of a joint venture results in an entity that is separate from the partners’ individual businesses and interests (Malescu Law, n.d.).  In addition to sharing ownership and governance, the joint venture parties also share returns and risks that will arise from this agreement. The formation of a joint venture enables companies to establish a stronger and more competitive position in foreign markets (Channon & Sammut-Bonnici, 2015). Through such an alliance, a company can develop in foreign markets, using the local resources of one partner as well as their local know-how and distribution channels.  Furthermore, companies involved in a JV can overcome any potential political obstacles or local bias against international companies and enter a foreign market that may otherwise not have been accessible.