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By- Roshan DeshmukhMBA- Fin(A)
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Definition-Joint Venture is the combined effort of two or
more
companies to form a new company.
A contractual agreement joining together two or moreparties for
the purpose of executing a particular businessundertaking. All
parties agree to share in the profits andlosses of the enterprise
.
It can be possible in two ways-AbsorptionConsolidation
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When an activity is uneconomical for an organizationto do
alone.
When the risk of the business has to be share andtherefore is
reduced.
When the distinctive competence of two or more
organization can be brought together.
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Between two firms in one industry.Between two firms across
different industries.Between an Indian Firm and a foreign company
in
India.Between an Indian firm and a foreign company in
thatforeign country.Between an Indian firm and a foreign company in
a
third country.
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It takes time and effort to build the right relationship and
partneringwith another business can be challenging.
There is an imbalance in levels of expertise, investment or
assetsbrought into the venture by the different partners.
Different cultures and management styles result in
poorintegration and co-operation.
The objectives of the venture are not 100 per cent clear
andcommunicated to everyone involved.
The partners don't provide enough leadership and support in
theearly stages.
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Sony-Ericsson is a joint venture bythe Japanese consumer
electronicscompany Sony Corporation and theSwedish
telecommunicationscompany Ericsson to make mobilephones. The stated
reason for thisventure is to combine Sony'sconsumer electronics
expertise withEricsson's technological leadership
in the communications sector. Bothcompanies have stopped
makingtheir own mobile phones.
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Virgin Mobile India Limited is acellular telephone service
provider
company which is a joint venturebetween Tata Tele service and
RichardBranson's Service Group. Currently, thecompany uses Tata's
CDMA network tooffer its services under the brandname Virgin Mobile
, and it has alsostarted GSM services in some states.
Tata Tele Service and Richard
Bransons Service Group
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Hero Honda Motors Ltd based in DelhiIndia is a joint venture
betweenHero Group of India & Honda of Japan.
It is been referred as worlds biggestmanufacturer of 2 wheeler
motorizedvehicles since 2001, when it produced 1.3million
motorbikes in a single year.
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Hero is the brand name used by the Munjal brothersfor their
flagship company Hero Cycles Ltd. A jointventure between the Hero
Group and Honda MotorCompany was established in 1984 as the
HeroHonda company, India.
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