Topic: Integrity in joint venture The Core of Joint Ventures Two heads, they say, are better than one. In the same way, entities, would sometimes, opt to join together to form a separate legal entity for the completion of a specific project in a determined period of time. This is most commonly referred to as joint ventures. Joint ventures are not only entered into by small companies. Large companies also resort to joint ventures to be able to undertake a big project. Resources are pooled into one and are used to sustain the business venture. The parties would then share in the revenues, expenses and control of the joint venture. Going into a joint venture offers considerable benefits to both parties. One, combining two companies could build their reputation and strength. Second, they could undertake a major project, even in an international scale, without compromising a single entity’s resources and operations. It could also lead the way to market diversification and industry evolution. However, not all joint ventures prove to be the perfect match. Some meet its downfalls due to various reasons. The most common reason is that the parties differ in philosophies and principles governing the control of the joint venture. Eventhough the parties had joined together, each party still needs to uphold their own philosophies and guiding principles. If these are in conflict with that of the other party’s, then the joint venture is compromised. Sometimes expectations are also not aligned. Even their operating style might be different. If the parties could not resolve their differences, then the joint venture is at risk. That is why entering into a joint venture is not a decision entities would decide on lightly. It needs careful planning, deliberation and even a feasibility study. The choice of who to partner with is a critical factor. For one, the partner must possess integrity and credibility. And most of all, it should be an entity that could be trusted. Trust in the sense that it could deliver the resources needed to see the project through and that it will not abandon the JV when the going gets tough. Both partners should be committed to the fulfillment of the project. If a certain joint venture is successful, then both parties would seek each other out if the opportunity for the same project arises.
There are a lot of joint ventures that proved to be a success. Some of these had even reshaped how the industry works. The essential thing entities must remember is that joint ventures are built on trust. It also is about predicting differences and working these out. Be careful who you put your head together with.
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