what are the needs of joint venture/

When two or more parties, normally carrying on business independently of one another, joint together to exploit particular business opportunity where their individual capabilities can be profitably pooled and share profits from the business done in the agreed ratio between the parties, their comes into existence a joint venture. It may be limited to one transaction or may extend to a number of transactions. If there is no agreement to the contrary the parties share profits & losses equally.

Needs of Joint Venture(JV) are as follows:
  1. When a company is controlled with high up front development costs, JV can provide necessary financing and credibility with third parties.
  2. JV can also be form for risk sharing, in highly capital intensive industries where high cost of product development equal to equal a failure of a particular product.
  3. If the fixed cost is high in any industry, JV can be affective by way which two companies can pool resources and achieve critical mass.
  4. If there is a attractive business opportunity, then partnering with a local company is more attractive because entering a foreign market can be difficult both because of a lack of experience in such market and local barriers to foreign companies.

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