Joint venture is a kind of strategic alliance and supposed a trade agreement of joint investment between two or more people (juridical or traders) in a determined period of time. A joint venture does not has to be a separate company or legal entity.
The purpose of a joint venture can be quite varied, from producing goods or providing services, seeking new markets or mutual support in the different links of a chain of a product. Will be developed during a limited time, in order to gain financial profits.
To achieve a common goal, two or more companies agree to make contributions of different kinds to the common business. The contributions may consist in raw materials, capital, technology, market knowledge, sales and distributions channels, personnel, goods, or, which is the same: capital, resources. This alliance does not involve the loss of identity and individuality as a legal entity.
Characteristics of the Joint Venture
There are no requirements on how to act together. Companies can sign an agreement, constitute a Temporal Union of both companies or even a Legal entity owned by both.
It is necessary, however, a compromise, and is also a characteristic of joint venture that companies remain independent of each other (there is neither absorption nor fusion).
n a joint venture, partners often continue to operate their businesses or companies independently of the joint venture that represents another business.
