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UNIVERSITY OF SCIENCE & TECHNOLOGY CHITTAGONG

Faculty of Business Administration

Assignment on Joint Venture

Submitted to:Eng. Muzammel Hoque

Assistant Professor, FBA, USTC

Submitted by:Pappu kumar Banik. Roll-697

Heru Barua. Roll-696Anik Dev. Roll-698

Devavrata Paul. Roll-709Batch:23rd Students of FBA,USTC

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IntroductionA joint venture (JV) is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets. There are other types of companies such as JV limited by guarantee, joint ventures limited by guarantee with partners holding shares.In European law, the term 'joint-venture' (or joint undertaking) is an elusive legal concept, better defined under the rules of company law. In France, the term 'joint venture' is variously translated as 'association d'entreprises', 'entreprise conjointe', 'coentreprise' or 'entreprise commune'. But generally, the term societe anonyme  loosely covers all foreign collaborations. In Germany, 'joint venture' is better represented as a 'combination of companies' (Konzern).

With individuals, when two or more persons come together to form a temporary partnership for the purpose of carrying out a particular project, such partnership can also be called a joint venture where the parties are "co-venturers".

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Definition of Joint Venture

Joint Venture is the cooperation of two or more individuals or businesses in which each agrees to share profit, loss and control in a specific enterprise. A Joint Venture (JV) is a collaborative, regional partnership of government agencies, non-profit organizations, corporations, tribes, and individuals that conserves habitat for priority bird species, other wildlife, and people.

Joint Ventures bring these diverse partners together under the guidance of national and international bird conservation plans to design and implement landscape-scale conservation efforts.

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Necessities of Joint Venture:Success in a joint venture depends on the choice of JV partner.Successful choice depends on:The partners sharing similar objectives The partners’ commitment to making the JV work A reward from the relationship, and An equal share in the risks and rewards.

If there is a fit with your organisation and the prospective partner: Financially Operationally Legally, and from a Governance / regulatory perspective

If you have researched your potential partner’s track record in: Maintaining relationships Resources to commit to the venture, and History of long-term commitment

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Features of Joint Venture Some important feature of joint venture business are as follows:•It is short duration special purpose partnership. Parties in venture are called co-ventures.•Co-ventures may contribute funds for running the venture or supply stock from their regular business.•Co-ventures share profits/loss of the venture at an agreed ratio likewise partnership.•Generally profit or loss of the venture is computed on completion of the venture.•Going concern assumption of accounting is not appropriate for joint venture accounting. There does not arise problem of distinction between capital and revenue expenditure.

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Joint Venture Agreement A written Joint Venture Agreement should cover:

•The parties involved•The objectives of the joint venture•Financial contributions you will each make whether you will transfer any assets or employees to the joint venture•Intellectual property developed by the participants in the joint venture•Day to day management of finances, responsibilities and processes to be followed.•Dispute resolution, how any disagreements between the parties will be resolved•How if necessary the joint venture can be terminated.•The use of confidentiality or non-disclosure agreements is also recommended to protect the parties when disclosing sensitive commercial secrets or confidential information. 

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Motivation for developing a joint

venture:The following areas need to be considered when forming a joint venture: •Capital •Branding •Expertise •Resources •Cultural •Legal •National/local government support

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Advantages of a Joint Venture

There are some advantage of joint venture, which is

Provide companies with the opportunity to gain new capacity and expertiseAllow companies to enter related businesses or new geographic markets or gain new technological knowledgeaccess to greater resources, including specialized staff and technologysharing of risks with a venture partnerJoint ventures can be flexible. For example, a joint venture can have a limited life span and only cover part of what you do, thus limiting both your commitment and the business' exposure.In the era of divestiture and consolidation, JV’s offer a creative way for companies to exit from non-core businesses.Companies can gradually separate a business from the rest of the organization, and eventually, sell it to the other parent company. Roughly 80% of all joint ventures end in a sale by one partner to the other.

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Disadvantages of a Joint Venture

The Disadvantages of Joint VenturesIt takes time and effort to build the right relationship and partnering with another business can be challenging. Problems are likely to arise if:The objectives of the venture are not 100 per cent clear and communicated to everyone involved.There is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners.Different cultures and management styles result in poor integration and co-operation.The partners don't provide enough leadership and support in the early stages.Success in a joint venture depends on thorough research and analysis of the objectives.

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Dissolution of joint VentureThe JV is not a permanent structure. It

can be dissolved when:Aims of original venture metAims of original venture not metEither or both parties develop new goalsEither or both parties no longer agree with joint venture aimsTime agreed for joint venture has expiredLegal or financial issuesEvolving market conditions mean that joint venture is no longer appropriate or relevantOne party acquires the other

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ConclusionA joint venture takes place when two parties come together to take on one project. In a joint venture, both parties are equally invested in the project in terms of money, time, and effort to build on the original concept. While joint ventures are generally small projects, major corporations also use this method in order 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. In order to achieve this success, honesty, integrity, and communication within the joint venture are necessary.