Joint Venture is a tool to diversify the risk involved in performing business activities. Each partner comes in with a capital and expertise so as to enhance the value of the entity and its operations. Its a mutually agreed contractual agreement between parties in order to complete a specific task or project.
A Joint Venture can benefit in the following ways;
1. Newer Markets and Distribution Networks will be tapped
2. Increased Capacity
3. Diversification of associated risk
4. Expertise such as improved technology, specialized staff will be at the disposal
5. Greater profits