Corporate joint venture definition
/What is a Corporate Joint Venture?
A corporate joint venture is an agreement between two or more entities to work together to achieve a specific goal. Once the goal has been reached, the agreement is terminated. For example, two corporations could combine their efforts to engage in a specific research project, where the two parties agree to equally share the knowledge obtained from the arrangement. Joint ventures are more common when a large amount of cash is needed to achieve a goal, when no single business has the requisite knowledge base, or when the risk of loss is too high to be borne by a single corporation.
A corporate joint venture is not the same as a corporate partnership, where the intent is to work together over a longer period of time to jointly earn a profit.
Advantages of a Corporate Joint Venture
There are several advantages to participating in a corporate joint venture, which are as follows:
Resource sharing. When the required investment is high, a joint venture allows you to spread the investment among several entities.
Reduced losses. When there is a significant risk of loss, a joint venture allows you to spread the potential loss among several participants.
Greater expertise. You can bring together expertise from several organizations that you might not have on your in-house staff.