What are the benefits of entering into Joint ventures?

When two or more independent firms together establish a new enterprise by pooling their capital, technology and expertise, it is known as a joint venture. The risks and rewards of the business are also shared. The aim of joint venture is business expansion, development of new products or moving into new markets, particularly in another country.

Benefits: 

1. Increased resources and capacity: 

Since two or more firms join together to form a joint venture, there is availability of increased capital and other resources, able to face market challenges and take advantage of new opportunities. 

2. Access to new markets and distribution networks: 

A foreign company gain access to the vast Indian market by entering into a joint venture with Indian Company. They can also take advantage of the established distribution channels.

3. Access to technology: 

It provides access to advanced techniques of production which increases efficiency and then helps in reduction in cost and improvement in quality of product.

4. Innovation: 

Foreign partners can come up with innovative products because of new ideas and technology.

5. Low cost of production: 

Low cost of raw materials, technically qualified workforce, management professionals, excellent manpower, etc. helps to reduce cost of production and it results increased productivity.

Established brand name : 

When one party has well-established brands and goodwill, the other party gets its benefits.