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Student's Book Form Five

agreement by the involved parties. Access to advanced technology: By
Motivation for forming a joint venture entering into joint ventures, companies get
includes business expansion, product access to various techniques of production,
development, and product expansion into marketing, and doing business, which
new markets, particularly internationally. decrease the overall cost and also improve
A joint venture provides the business with the quality of products.
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several benefits including more financial Dissolution: Once the term or purpose of
resources, more management capacity, the joint venture is complete, the agreement
more technical know-how, access to comes to an end, and the accounts of
well-established markets, and means of the co-ventures are settled as when it is
distribution. dissolved.

Features of joint ventures Advantages of joint ventures

The following are the features of joint The following are the advantages of joint
ventures: ventures:
Agreement: Two or more companies agree Access to new markets: A joint venture
to undertake a business for a definite agreement provides an opportunity to
purpose and are bound by it. access new markets and distribution

Joint control: There exists a joint control networks. This in turn enhances sales of
of the co-ventures over business assets, the products rendered by the new joint
operations, administration, and even the venture firm.
venture. Enhance business growth: Joint venture
Pooling of resources: Firms in the joint arrangement helps businesses to grow
venture pool their resources, which help faster, increase productivity, and generate
in large-scale production including capital, greater profits as it brings companies
manpower, technical know-how and together with their resources including
expertise. networks.

Sharing of profit and loss: The co-ventures Provides access to more resources: When
agree to share the profits and losses of two or more companies agree on a joint
the business in an agreed ratio mostly venture, it means they are pooling together
depending on the amount of capital the resources including technology and
contributed by each party. The computation staff to an established venture. This is
of the profit and loss is usually done at the advantageous in combining expertise,
end of the business venture. However, knowledge, and technology in offering
where the business continues for a long better services.
duration, the profit and loss are calculated Flexibility: Being a temporary contract
and shared annually. between participating companies, a joint

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