Oct 20

Idea of Joint Ventures

There are many reasons as to why people proceed with the idea of joint ventures with their partners. Today, creating a joint venture to provide distribution channels, technology or finance are common ways for companies to create unique kinds of strategic alliances that will allow both parties to benefit greatly.

In a joint venture, there are usually two or more parent companies that agree to share the capital, equipment, human resources, rewards as well as risks to form an entity under shared control. The idea is for both companies to work towards a common goal while leveraging on the resources of each party without need for additional costs.

So exactly how does a joint venture work? And how do you set up an effective one?

The first thing you should probably do to develop on your idea of joint ventures is to filter a list of prospective partners in this campaign. Try short listing a set of prospective partners based on their ability to contribute and develop a business plan. Essential steps involve checking the credentials of each potential partner and ensuring that they are a trusted and verified company.

Another step you could take – if you had the information, would be to ask other parties or companies that your potential partner previously worked with for their opinions and experiences with the potential partner. This could give you unique insights that you might have not thought of during your own evaluation.

If your joint venture involves a substantial amount of investment, it could be a wise choice to have a ‘business architect’ on hand. This role will focus on initiating new business ventures and overseeing the process of the business innovation. He or she will be responsible for building a sustainable and balanced system to ensure maximum returns for all parties.

These business architects can be found in numerous business settings, may it be corporate leaders, partnership venture initiators, managers of projects or spin outs. Even though the settings in which a business architect operates from are different, they all essentially design and run a new model to achieve sustainable business growth.

Now let us move into a little about business strategy. The first thing you should do is to ask yourself why did you opt for entering a joint venture and why have you chosen the partners you have right now. What do you wish to achieve in this venture? Place your strategies that define governance, process of decision-making, accountability and conflict and problem resolution methods. And always remember to consider the outcomes that you will be facing in the future such as what could cause you to end the collaboration and the details of this end.

Having a good strategy in your idea of joint ventures is similar to accomplishing half of the task at hand. Be sure that you are well-equipped in this aspect in order to ready yourself for the events you will encounter.

Do keep in mind that it is also important that proper leadership is present in order to keep the business model working. Do a leadership selection within your merged companies that involves fair and credible personnel and name these leaders right away.

The idea of joint ventures is to have a successful alliance with different companies to eventually exponentially and mutually grow the business of both parties.

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