This helps each company create a competitive advantage and greater brand recognition among customers because the companies can promote one another.This model reduces the upfront amount of investment and reduces overall costs.The low initial investment and reduced cost of getting started is the thing that most companies find appealing about entering a joint venture. The Advantage of Lower Initial Investment To protect yourself from potential mismanagement in a joint venture, it's best to bring on a professional consultant or attorney to help in the development of the procedures that will govern the joint venture relationship. Therefore, the investment risk for each party is greater. The presence of two joint ventures per project increases the number of ways operational issues may cause failures and could even lead to mismanagement of resources on the part of one or both parties. The Disadvantage of Potential Operational Failure By sharing the burden, the chance of a project failing and having a negative impact on a company's financial health is reduced because the cost of the project is shared by each of the joint venture's involved parties.This eases the burden of financial challenges, researching the market, and developing the product. ![]()
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