What Are the Advantages and Disadvantages of a Joint Venture?

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There are several advantages and disadvantages that come with joint venture partnerships, according to NI Business Info. One of the advantages of this type of partnership is the immediate access to new markets that can accelerate business growth, while one of the disadvantages might be an inability of both partners to see eye-to-eye on goals and objectives.

Bloomberg Businessweek suggests another great advantage to joint venture partnerships: access to new resources and expertise not available in-house. For instance, a company with an impressive client roster but lacking the technology and expertise to expand into new areas could benefit from joining forces with a company that specializes in technology but needs more clients. In this situation, both companies benefit from the other partner's strengths.

On the other hand, a joint venture can also cause problems for one or both partners. Some common issues that come up are a lack of good communication with staff, poor integration of work cultures, and an imbalance of the level of commitment to the partnership. According to Inc. magazine, one way to reduce these risks is to conduct thorough research into the background of prospective partners, which could uncover red flags that signal potential problems down the road.