Joint ventures tend to be most common in industries where new projects require specific knowledge and skills and large investment budgets.Ī company might decide to form a joint venture with a local partner to enter a foreign market. Or companies might pool their assets to take on a dominant competitor. One company might have an innovative technical design for a new product while another company has advanced manufacturing capabilities. What do you need to know about a joint venture?Ĭompanies typically form joint ventures to combine their talent and expertise, benefit from economies of scale and combine complementary resources. When reading a company’s financial reports, you may see revenues, costs and profits recorded from its share of a joint venture. Other joint venture examples include Google Earth, a JV between Google and NASA, and Vevo, a JV between Universal Music Group, Sony Music Entertainment and EMI. Some joint ventures become well-known, such as Verizon Wireless, a telecom joint venture between UK-based Vodafone (VOD) and Verizon (VZ) in the US. Where have you heard of a joint venture?Īs an investor, you will have likely seen announcements from companies you follow and invest in that they have formed a joint venture. The activities of the JV are kept separate from the rest of their businesses, and in some cases, the JV is established as a distinct, third company with management executives from both companies.
What does the joint venture mean? In a JV, the parties to the agreement combine their expertise and financial resources, usually to offer a product or service, sharing in the profits or losses it generates.
US30 US Wall Street 30 (USA 30, Dow Jones)Ī joint venture (JV) is an arrangement between two or more organisations to work together on a particular aspect of their business.
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