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Student's Book Form Five

venture can dissolve at any specific future different beliefs, tastes, and preferences
date or when the project is completed. which may lead to poor cooperation and

No loss of identity: Each company can integration. This may undermine their
maintain its own identity and can easily profitability.
return to normal business operations once
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the joint venture is complete. Activity 2.4
Economies of scale: Joint ventures help Based on the context of Tanzania,
organisations to scale up with their limited review different literature on joint
capacity. The strength of one organisation ventures from reliable sources, then:
can be utilised by the other. This gives (a) Describe the process of forming a
a competitive advantage to both the joint venture.
organisations to generate economies of (b) Discuss the reasons for the success
scale. and failure of the joint ventures.

Minimisation of risk: Joint ventures tend to (c) Explain what you could do to ensure
share risks between the companies involved that, the joint ventures succeed.
in the agreement. This in turn helps to
minimise the overall risk of the venture.

Disadvantages of the joint ventures Exercise 2.4

The following are the disadvantages of the Collaboration is one of the important
joint ventures:
aspects of the success of any business.
Taxation challenges: Creating a joint Briefly explain the benefits of jointly
venture may result in more complex tax owned businesses.
arrangements especially when the joint
venture involves companies from different
countries. Co-operatives
Co-operative organisations also known
Political risk: Joint ventures formed by as co-operative societies are voluntarily
companies from different countries may formed by individuals with common
involve high political risks especially if interests of pooling resources to promote
the wrong partner is chosen.
their welfare. In Tanzania, co-operative
Unequal involvement: Equal pay may be organisations started during the colonial
possible, but it is extremely unlikely for all period. Co-operative organisations differ
the companies working together to share from other major forms of organisations
the same involvement and responsibilities. since they are set not for profit earning

Clash of cultures: Companies involved but to promote the welfare of their
in the joint venture agreement may have members. Co-operative organisations are

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