By- Roshan Deshmukh MBA- Fin(A)

DefinitionJoint Venture is the combined effort of two or more companies to form a new company. A contractual agreement joining together two or more parties for the purpose of executing a particular business undertaking. All parties agree to share in the profits and losses of the enterprise .

It can be possible in two ways Absorption Consolidation

When an activity is uneconomical for an organization to do alone. When the risk of the business has to be share and therefore is reduced. When the distinctive competence of two or more organization can be brought together.

Between two firms in one industry. Between two firms across different industries. Between an Indian Firm and a foreign company in India. Between an Indian firm and a foreign company in that foreign country. Between an Indian firm and a foreign company in a third country.

Provide companies with the opportunity to gain new capacity and expertise. Allow companies to enter related businesses or new geographic markets or gain new technological knowledge.

access to greater resources, including specialised staff and technology.

sharing of risks with a venture partner. Joint ventures can be flexible. For example, a joint venture can have a limited life span and only cover part of what you do, thus limiting both your commitment and the business' exposure.

It takes time and effort to build the right relationship and partnering with another business can be challenging. There is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners.

Different cultures and management styles result in poor integration and co-operation.
The objectives of the venture are not 100 per cent clear and communicated to everyone involved. The partners don't provide enough leadership and support in the early stages.

Sony-Ericsson is a joint venture by the Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson to make mobile phones. The stated reason for this venture is to combine Sony's consumer electronics expertise with Ericsson's technological leadership in the communications sector. Both companies have stopped making their own mobile phones.

Tata Tele Service and Richard Bransons Service Group

Virgin Mobile India Limited is a cellular telephone service provider company which is a joint venture between Tata Tele service and Richard Branson's Service Group. Currently, the company uses Tata's CDMA network to offer its services under the brand name Virgin Mobile, and it has also started GSM services in some states.

Hero Honda Motors Ltd based in Delhi India is a joint venture between Hero Group of India & Honda of Japan. It is been referred as worlds biggest manufacturer of 2 wheeler motorized vehicles since 2001, when it produced 1.3 million motorbikes in a single year.

Hero is the brand name used by the Munjal brothers for their flagship company Hero Cycles Ltd. A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda company, India.