Joint Venture

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Term Definition
Joint Venture

A partnership between two or more companies to undertake a specific business project

A joint venture (JV) is a business agreement where two or more companies combine their resources to achieve a specific shared objective. It's essentially a partnership with a formal structure and shared ownership, risks, and rewards.

Here's a breakdown of the key aspects:

Parties involved:

  • Two or more companies: These can be from the same or different industries.
  • May involve other entities: Sometimes, government agencies, non-profit organizations, or individuals can be involved.


  • Shared objective: This could be launching a new product, entering a new market, accessing resources, or sharing expertise.
  • Temporary or permanent: Some JVs are established for a specific project, while others are ongoing partnerships.


  • Formal agreement: Outlines the rights, responsibilities, and profit-sharing arrangements of each party.
  • Shared governance: Decisions are typically made jointly by representatives from each company.
  • Independent entity: In some cases, the JV may operate as a separate legal entity.


  • Risk sharing: Reduces the risk for each individual company involved.
  • Combined resources: Provides access to capital, expertise, and market reach that individual companies may lack.
  • Shared expertise: Enables companies to leverage each other's strengths and knowledge.
  • Faster market entry: Can help companies enter new markets more quickly and efficiently.


  • Conflicts of interest: Balancing the interests of different companies can be challenging.
  • Cultural differences: Integrating different company cultures and management styles can be complex.
  • Decision-making: Reaching consensus on decisions can take time and effort.

Examples of joint ventures:

  • Starbucks and PepsiCo: Formed a JV to create and distribute Starbucks-branded ready-to-drink coffee in North America.
  • Honda and General Motors: Established a JV to develop and manufacture fuel cell vehicles.
  • BBC and Discovery Channel: Partnered to create a global natural history channel.