Definition, Explanation and Examples of Joint Venture:
Learning Objectives:
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Define and explain the terms
joint venture.
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What the advantages or
benefits of joint venture.
Definition:
A joint venture is a temporary partnership of
two or more persons engaged in any particular business adventure of
enterprise of short or seasonal duration.
Examples of Joint Venture:
It may be in connection with
speculation in shares, underwriting of shares or debentures of new
companies, or any other similar temporary or seasonal business enterprise.
As the parties to a joint venture do business in union with others, they
also share profit or loss between themselves in some agreed proportion.
Advantages of joint venture enterprise
are that perhaps one party may buy goods at a much cheaper rate, but he has
no capital; a second person may perhaps advance the requisite capital, but
has no business acumen; while a third individual is a good salesman and can
sell the goods readily at a good margin. In a case like this, it is
advantageous for all the three to combine their energy and work for mutual
gain.
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