Joint Venture Project

The project which is undertaken to produce goods and services through collaboration of foreign and local company's investors is called joint venture project. The ownership of these types of project is proportionately shared in an agreed ratio. The project is associate with transfer of raw materials, capital, information and technology and managerial skill in which country the project is implemented or required raw materials, components, technical and managerial know-how is supplied to the host company by foreign company. Therefore, these factors are supplied by parent company of foreign country to host company of local company under joint venture agreement.

The establishment of joint venture project is the result of large foreign country's desired to expand the business in other country. For this purpose, foreign companies make a joint venture agreement with small business company of host country to implement the project. Both companies play vital role to achieve the project success. However, joint venture projects are profit oriented. Joint venture business agreement is becoming very popular throughout the world due to globalization and advancement in information and technology. Its projects can involve equity participation for production, technology transfer, managerial contract and marketing.
 

Advantages of Joint Venture Project: 

• It takes advantage of lower level and raw material cost in host country.
• It provide greater employment opportunities to the people of host country.
• It helps to transfer resources, technology and managerial skills from country to country.
• It produces qualitative output.
• It makes market entry easier in foreign market.
• It helps to contribute the economic growth of any country.
• Its projects spread risks.

 Disadvantages of Joint Venture Project: 

• It may adversely affect the small local project of host country due to tough competition.
• It increases dependency on foreign countries.
• It may create employment opportunities to only skilled manpower.
• There is high possibility of conflict between foreign and local company.