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to undertake economic activity together. The parties agree to create a new entity by both
contributing equity, and they then share in the revenues, expenses, and control of the
enterprise. The venture can be for one specific project only, or a continuing business
relationship such as the Sony Ericsson joint venture. This is in contrast to a strategic
alliance, which involves no equity stake by the participants, and is a much less rigid
arrangement.
The phrase generally refers to the purpose of the entity and not to a type of entity.
Therefore, a joint venture may be a corporation, limited liability company, partnership or
other legal structure, depending on a number of considerations such as tax and tort
liability.
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Some countries, such as the People's Republic of China and to some extent India, require
foreign companies to form joint ventures with domestic firms in order to enter a market.
This requirement often forces technology transfers and managerial control to the
domestic partner.
A majority of joint ventures fail in Asia due to cultural differences, as was the case with
the alliance between Renault, a French car company, and Nissan. Joint ventures fail due
to various reasons, including the lack of communication and the distribution of power
between management.
Another form joint ventures may take are the Joint Ventures (JV's) in the U.S., Canada,
and Mexico dedicated to the conservation of priority bird species and their associated
habitats. Each of these JV's is different in how they go about their respective missions,
but all try to follow the principles of Strategic Habitat Conservation(SHC). SHC
combines biological planning, conservation design, conservation delivery, and evaluation
and monitoring. Gulf Coast Joint Venture, Lower Mississippi Valley Joint Venture, and
Prairie Pothole Joint Venture are just three of the 20+ JV's found in North America.
Competitive goals
Strategic goals
1. Synergies
2. Transfer of technology/skills
3. Diversification