Introduction

After the dawn of globalization, there has been a great rush towards joint ventures as it has opened up the vast third world market to the developed western industrial houses. Be it hardware industries like steel, automobile or software development and service industries like hotel and BPO industries, there has been a great deal of cross border joint ventures. India has been regarded as the most lucrative target for these industrial houses of the West.

Definition
A joint venture is a strategic alliance between two or more individuals or entities to engage in a specific project or undertaking. Partnerships and joint ventures can be similar but in fact can have significantly different implications for those involved. A partnership usually involves a continuing, long-term business relationship, whereas a joint venture is based on a single business project. A joint venture is a general partnership typically formed to undertake a particular business transaction or project and is intended to exist for a limited time period. Joint ventures typically exist for 5-7 years. In a joint venture, two or more "parent" companies agree to share capital, technology, human resources, risks and rewards in a formation of a new entity under shared control. A joint venture is created with a specific project in mind and generally dissolves once the project has been completed. .

Duration Period Of Joint Venture

The duration of a joint venture depends on the terms of the contract between the parties. The venture will continue until the time stipulated in a contract. But where an agreement lacked a definite term of duration, it may be terminated at will by either party

Advantages
1) Provide companies with the opportunity to gain new capacity and expertise. 2) Allow companies to enter related businesses or new geographic markets or gain new technological knowledge. 3) Access to greater resources, including specialised staff and technology. 4) Sharing risks with a venture partner. 5) 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. 6) In the era of divestiture and consolidation, JVs offer a creative way for companies to exit from non-core businesses. 7) 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.

Disadvantages
It takes time and effort to build the right relationship and partnering with another business can be challenging. Problems are likely to arise if: 1) 2) 3) 4) 5) 6) 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. Not considering the benefits of all the stake holders especially the persons who are displaced for big manufacturing concerns.

Some Joint Ventures

Sony-Ericsson is a joint venture by the Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson to make mobile phones. The stated reason for this venture is to combine Sony's consumer electronics expertise with Ericsson's technological leadership in the communications sector.

 Virgin Mobile India Limited is a cellular telephone service provider company which is a joint venture between Tata Tele service and Richard Branson's Service Group. Currently, the company uses Tata's CDMA network to offer its services under the brand name Virgin Mobile, and it has also started GSM services in some states.

Not so successful cross border ventures.

Mahindra-Renault joint venture In a joint venture between the two companies, 51 per cent of the stake is held by Mahindra and Mahindra while the rest of 49 per cent is being held by French car maker Renault. But their first car Logan was a failure because of technical reasons as well as stiff competition from other makers.

Failed joint ventures

Chinese consumer electronics, IT and telecom products major TCL Corporation Baron international in Mumbai Loss of 40 cr. Reason without understanding the market and local aspirations.