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The main advantages of a joint venture are:
1. More resources: since two or more firms join together to form a joint venture, there is availability of increased capital and other resources.
2. Access to new markets: by engaging with a foreign collaborator, the products and services can be marketed in a foreign country.
3. New and improved Technology: One partner may have the new and improved technology but do not have the resources. Other partner may have resources like capital but do not have the technology. In such causes joint venture can fetch new and improved technology as well as great resources. By engaging a foreign partner, improved foreign technology can be availed from it's foreign collaborator.
4. Use of existing marketing arrangements or existing distribution network of one of the party is possible.
5. Access to improved resources like experienced technicians, experienced staff, greater capacity, financial resources etc. are possible through joint venture business.
6. Sharing of costs and risks with partners.
7. Diversification of business by producing new products or new area of business.
8. Increased productivity and grater profits.
9. Exchange of Products: Joint venture companies can offer their existing product to sell through the partners network and share the profit. Both JV partners can do the same. By exchanging products and services of the partner, they can diversify the product basket and sell it to their existing customers and increase the profit.
There many disadvantage in the joint venture form of business. They are:
1. It take time and efforts to form the right relationship.
2. The objectives of each partner may differ. The objectives needs to be clearly defined and communicated to everyone involved.
3. Imbalance in the share of capital, expertise, investment etc., may cause friction in between the partners.
4. Difference in the culture and style of business lead to poor co-operation.
5. Lack of assuming responsibility by the partners may lead the collapse of business.
6. Lack of communication between the partners may affect the business.
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Advantages
1- It can arrange huge amount of finance
2- Highly expertise is available
3- Target completion of Project
Disadvantages
1- Its only for a specific period
2- Lack of trust of suppliers and employees
3- Doubts and misutilization of funds due to different entities
