{"id":271,"date":"2014-09-05T17:06:15","date_gmt":"2014-09-05T17:06:15","guid":{"rendered":"https:\/\/courses.candelalearning.com\/internationalbusiness1xmaster\/?post_type=chapter&p=271"},"modified":"2015-02-17T21:47:43","modified_gmt":"2015-02-17T21:47:43","slug":"reading-joint-ventures","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-internationalbusiness\/chapter\/reading-joint-ventures\/","title":{"raw":"Reading: Joint Ventures","rendered":"Reading: Joint Ventures"},"content":{"raw":"
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In a joint venture business model, two or more parties agree to invest time, equity, and effort for the development of a new shared project.<\/h2>\r\n<\/div>\r\n
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KEY TAKEAWAYs<\/h3>\r\n
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  • Joint business ventures involve two parties contributing their own equity and resources to develop a new project. The enterprise, revenues, expenses and assets\u00a0are shared by the involved parties.<\/li>\r\n\t
  • Since money is involved in a\u00a0joint venture, it is necessary to have a strategic plan in place.<\/li>\r\n\t
  • As the cost of starting new projects is generally high, a joint venture allows both parties to share the burden of the project as well as the resulting\u00a0profits.<\/li>\r\n<\/ul>\r\n<\/div>\r\n<\/section><\/div>\r\n<\/div>\r\n<\/div>\r\n
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    Term<\/strong><\/h4>\r\n
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    • Joint venture<\/em>:\u00a0 A\u00a0cooperative\u00a0partnership\u00a0between two individuals or businesses in which profits and risks are shared.<\/li>\r\n<\/ul>\r\n
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      Example<\/strong><\/h4>\r\n
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      • Sony Ericsson is a joint venture between Swedish telecom\u00a0corporation\u00a0Ericsson and Japanese electronics manufacturer Sony to develop cellular devices.<\/li>\r\n<\/ul>\r\n<\/div>\r\n<\/div>\r\n
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        Joint Ventures<\/strong><\/h2>\r\nA joint venture is a business agreement in which parties agree to develop a new entity and new\u00a0assets\u00a0by contributing equity. They exercise control over theenterprise\u00a0and consequently share revenues,\u00a0expenses\u00a0and assets.\r\n\r\n
        \"\"\r\n
        Joint Venture<\/div>\r\n
        Sony Ericsson is a joint venture between\u00a0Swedish telecom corporation\u00a0Ericsson and\u00a0Japanese electronics manufacturer\u00a0Sony to develop cellular devices.<\/figcaption><\/figure>\r\n
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        \r\n\r\nWhen two or more persons come together to form a partnership for the purpose of carrying out a project, this is called a joint venture. In this scenario, both parties are equally invested in the project in terms of\u00a0money, time and effort to build on the original concept. While joint ventures are generally small projects, major corporations use this method to diversify. A joint venture can ensure the success of smaller projects for those that are just starting in the business world or for established corporations. Since the cost of starting new projects is generally high, a joint venture allows both parties to share the burden of the project as well as the resulting profits.Since money is involved in a joint venture, it is necessary to have a strategic plan in place. In short, both parties must be committed to focusing on the future of the partnership rather than just the immediate returns. Ultimately, short term and long term successes are both important.To achieve this success, honesty, integrity and\u00a0communication\u00a0within the joint venture are necessary.\r\n\r\nA consortium JV (also known as a cooperative agreement) is formed when one party seeks technological expertise,\u00a0franchise\u00a0and brand-use agreements, management contracts, and rental agreements for one-time contracts. The JV is dissolved when that\u00a0goal\u00a0is reached. Some major joint ventures include Dow Corning, MillerCoors, Sony Ericsson, Penske Truck Leasing, Norampac, and Owens-Corning.\r\n\r\n<\/div>\r\n<\/div>\r\n
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        <\/h3>\r\n
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        GLOSSARY<\/h3>\r\n
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        \r\n\r\nAssets<\/strong>\r\n\r\nEconomic resources that represent value of ownership that can be converted into cash (although cash itself is also considered an asset). Any property or object of value that one possesses, usually considered as applicable to the payment of one's debts.\u00a0A resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nAsset<\/strong>\r\n\r\nSomething or someone of any value; any portion of one's property or effects so considered. Something or someone of any value; any portion of one's property or effects so considered.\u00a0Any component, model, process, or framework of value that can be leveraged or reused.\u00a0Items of ownership convertible into cash; total resources of a person or business, as cash, notes and accounts receivable; securities and accounts receivable, securities, inventories, goodwill, fixtures, machinery, or real estate (as opposed to liabilities).\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nBusiness model<\/strong>\r\n\r\nThe particular way in which a business organization ensures that it generates income, one that includes the choice of offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nCommunication<\/strong>\r\n\r\nThe concept or state of exchanging information between entities.\u00a0An instance of information transfer; a conversation or discourse\u00a0the concept or state of exchanging data or information between entities.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nCooperative<\/strong>\r\n\r\nA type of company that is owned partially or wholly by its employees, customers, or tenants. Abbreviation: co-op.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nCorporation<\/strong>\r\n\r\nA group of individuals, created by law or under authority of law, having a continuous existence independent of the existences of its members, and powers and liabilities distinct from those of its members.\u00a0a group of individuals, created by law or under authority of law, having a continuous existence independent of the existences of its members, and powers and liabilities distinct from those of its members.\r\n
        <\/div>\r\n<\/div>\r\nEnterprise<\/strong>\r\n\r\nA company, business, organization, or other purposeful endeavor.\r\n
        <\/div>\r\n
        Equity<\/strong><\/div>\r\n
        A legal tradition that deals with remedies other than monetary relief, such as injunctions, divorces and similar actions.\u00a0Justice, impartiality or fairness. Internal and external equity relate to a comparative level of pay compared to both internal and external candidates.\u00a0Ownership interest in a company as determined by subtracting liabilities from assets.\u00a0Ownership interest in a company, as determined by subtracting liabilities from assets.\u00a0Ownership interest in a company, as determined by subtracting liabilities\u00a0from\u00a0assets.\u00a0Justice, impartiality or fairness.\u00a0The residual claim or interest to investors in assets after all liabilities are paid. If liability exceeds assets, negative equity exists and can be purchased through stock.\u00a0Ownership, especially in terms of net monetary value, of a business.Ownership, especially in terms of net monetary value of some business.\r\n
        <\/div>\r\n<\/div>\r\nExpense<\/strong>\r\n\r\nA spending or consuming. Often specifically an act of disbursing or spending funds.\u00a0In accounting, an expense is money\u00a0spent or costs\u00a0incurred in an businesses\u00a0efforts to generate revenue.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nFranchise<\/strong>\r\n\r\nThe authorization granted by a company to sell or distribute its goods or services in a certain area.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nGoal<\/strong>\r\n\r\nA result that one is attempting to achieve\u00a0A desired result that one works to achieve.\u00a0A result that one is attempting to achieve.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nManagement<\/strong>\r\n\r\nThe act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively.\u00a0administration; the process or practice of managing administration; the process or practice of managing.\u00a0Administration; the process or practice of managing.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nMoney<\/strong>\r\n\r\nA generally accepted means of exchange and measure of value. A generally accepted means of exchange and measure of value.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nPartnership<\/strong>\r\n\r\nAn association of two or more people to conduct a business.\u00a0A business owned by two or more people.\u00a0A partnership is a form of business in which two or more people operate for the common goal of making profit. Each partner has total and unlimited personal liability of the debts incurred by the partnership.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nProfits<\/strong>\r\n\r\nCollective form of profit.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nResource<\/strong>\r\n\r\nSomething that one uses to achieve an objective. An examples of a resource could be a raw material or an employee.\u00a0Something that one uses to achieve an objective, e.g. raw materials or personnel.\r\n
        <\/div>\r\n<\/div>\r\n
        Revenue<\/strong><\/div>\r\n
        Income that a company receives from its normal business activities, usually from the sale of goods and services to customers.\u00a0The total income received from a given source. In business, revenue or turnover is income that a company receives from its normal business activities, usually from the sale of goods and services to customers.<\/div>\r\n<\/div>\r\n<\/section><\/div>\r\n<\/div>\r\n
        <\/div>\r\n
        <\/div>\r\n<\/div>","rendered":"
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        In a joint venture business model, two or more parties agree to invest time, equity, and effort for the development of a new shared project.<\/h2>\n<\/div>\n
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        KEY TAKEAWAYs<\/h3>\n
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