Benefits

Businesses can achieve unexpected gains through joint ventures, which can be highly beneficial for both parties. Even a party with strong growth potential and innovative ideas gains, because a joint venture enhances its capacity, resources and technical expertise. The major benefits are:

• (i) Increased resources and capacity: teaming up adds to existing resources and capacity, letting the new company grow and expand more quickly and efficiently. Pooling financial and human resources helps it face market challenges and seize new opportunities.
• (ii) Access to new markets and distribution networks: entering a joint venture with a partner from another country opens up a vast growing market. For example, foreign companies forming joint ventures in India gain access to the huge Indian market and can sell products that had reached saturation in their home markets. They also use the partner's established distribution channels — the retail outlets in local markets — instead of building their own, which would be very expensive.
• (iii) Access to technology: technology is a major reason for joint ventures. A partner's advanced production techniques give superior-quality products and save time, energy and investment, since the business need not develop its own technology. Technology also raises efficiency and effectiveness, cutting costs.
• (iv) Innovation: markets increasingly demand new and innovative products. Joint ventures let a business bring something new and creative to the market — foreign partners especially can offer innovative products through fresh ideas and technology. …