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Entering Supplier Joint Ventures With Eyes Wide Open


Joint Ventures offer remarkable opportunity for two or more companies to leverage their strengths and minimize weaknesses. In doing so, new value is created.

A joint venture is a relationship in which two or more business enterprises pursue mutually agreed upon goals by forming an association in which each independent business agrees to share control and subsequent risk, profits and losses. It can take a couple of forms, either as a contractual arrangement or as a whole new independent enterprise, but the original companies continue to operate independently at the same time. That is the formal definition of a joint venture, but the implications of this kind of business arrangement are that the alliance is formed because both businesses believe that each has something significant to gain by working together that would not be possible alone. Normally, the joint venture represents increased access, innovation, opportunity and growth because it is an alliance that enhances business strengths and lessens weaknesses. In a struggling globalized economy, joint ventures represent a sensible response that enables businesses to manage uncertainty from a position of strength.

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