Joint Venture - JV

AAA

DEFINITION of 'Joint Venture - JV'

A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it. However, the venture is its own entity, separate and apart from the participants' other business interests.

INVESTOPEDIA EXPLAINS 'Joint Venture - JV'

Although JVs represent a great way to pool capital and expertise and reduce the exposure of risk to all involved, they do present some unique challenges as well. For instance, if party A comes up with an idea that allows the JV to flourish, what cut of the profits does party A get? Does the party simply receive a cut based on the original investment pool or is there recognition of the party's contribution above and beyond the initial stake? For this and other reasons, it is estimated that nearly half of all JVs last less than four years and end in animosity.

VIDEO

Loading the player...
RELATED TERMS
  1. Strategic Joint Venture

    A business agreement between two different companies to work ...
  2. Coopetition

    Cooperation between competing companies. Businesses that engage ...
  3. Buy And Sell Agreement

    An approach used by sole proprietorships, partnerships and closed ...
  4. Intrapreneur

    An inside entrepreneur, or an entrepreneur within a large firm, ...
  5. Strategic Alliance

    An arrangement between two companies that have decided to share ...
  6. Partnership

    A business organization in which two or more individuals manage ...
RELATED FAQS
  1. What are the primary advantages of forming a joint venture?

    As an alternative to a business merger or acquisition, forming a joint venture is a common business strategy used among companies ... Read Full Answer >>
  2. What are the primary disadvantages of forming a joint venture?

    A joint venture is a common method to combine the business prowess, industry expertise and personnel of two otherwise unrelated ... Read Full Answer >>
  3. How is productivity calculated?

    Productivity measures the efficiency of a company's production process. It is calculated by dividing the outputs produced ... Read Full Answer >>
  4. What is the role of agency theory in corporate governance?

    Agency theory is used to understand the relationships between agents and principals. The agent represents the principal in ... Read Full Answer >>
  5. What's the difference between agency theory and stakeholder theory?

    Agency theory and stakeholder theory are both used to understand and explain various types of relationships in business. ... Read Full Answer >>
  6. What is a diseconomy of scale and how does this occur?

    In economics, diseconomies of scale describes the phenomenon that occurs when a firm experiences increasing marginal costs ... Read Full Answer >>
Related Articles
  1. Professionals

    What does Joint Venture Mean?

    In a typical joint venture, two or more businesses agree to contribute capital and resources for a common project. Most often, that project produces something that earns revenue.
  2. Entrepreneurship

    In Small Business, Success Is Spelled With 5 "C"s

    Incorporating these steps will help your business thrive in a competitive market.
  3. Entrepreneurship

    Reality Check: Why Startups Fail

    New ventures have only a 50% chance of making it through the first five years. Find out why.
  4. Entrepreneurship

    Small Business: It's All About Relationships

    Rather than be a jack-of-all-trades, an owner should rely on a network of trusted experts.
  5. Options & Futures

    The Basics Of Mergers And Acquisitions

    Learn what corporate restructuring is, why companies do it and why it sometimes doesn't work.
  6. Economics

    The Nash Equilibrium

    Nash Equilibrium is a key concept of game theory, which helps explain how people and groups approach complex decisions. Named after renowned mathematician John Nash, the idea of Nash Equilibrium ...
  7. Investing Basics

    The Basics Of A Financial Analysis Report

    Running financial analysis on a company or industry is a key skill every investor must learn and understand how to undertake without which an ineffective financial report and investment recommendation ...
  8. Economics

    How Education And Training Affect The Economy

    Education and training benefit not only the worker, but also the employer and the country as a whole.
  9. Active Trading

    Viewing The Market As Organized Chaos

    Find out how a cat and a ladybug prove markets are both random and efficient.
  10. Active Trading

    Qualitative Analysis: What Makes A Company Great?

    To understand the qualities that make for a great company, investors must dig deep into "soft" metrics.

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center