This means that corporations, partnerships, limited liability companies (LLCs), and other types of business entities can all be utilized to form a joint venture. They can also have a limited or indefinite duration, depending on the goals of the parties involved.Įven though a joint venture is commonly understood as a partnership, it can actually be established using any legal structure available. Joint ventures can take many forms, such as a 50/ 50 partnership or one party owning a larger share of the venture than the other. Joint ventures can also be formed for various reasons, such as sharing expertise, accessing new markets, gaining economies of scale, reducing risks and costs, and leveraging complementary strengths and resources.

Joint ventures are often formed to pursue specific projects, which can include launching a new product or service or establishing a brand-new company with different core business activities. Haven, the joint venture by Amazon, Berkshire Hathaway, and JPMorgan Chase, is yet another example of a failed joint venture.A joint venture, or JV, is a business partnership where two or more organizations pool their resources together to gain a competitive advantage in the market. The arrangement went so sour that Tiffany & Co was ordered to pay Swatch Group $448M. Despite some difficulties, both parties benefited from the arrangement by playing on each other’s strengths.įor an example of a failed joint venture, it’s hard to look past the one between luxury jewelry company, Tiffany & Co, and famed watch retailer, Swatch Group. It involved the iconic coffee chain setting up shop in Barnes & Noble bookstores. The two companies entered into a joint engineering agreement in 2016 and jointly developed the production of a self-driving car, which Uber plans to deploy in the near future.Īnother oft-cited example is the joint venture between Starbucks Corporation and Barnes & Noble. The joint venture between Volvo Cars and Uber is also considered an example of a successful joint venture.

This example is by and large considered to be one of the most successful joint ventures in recent times, culminating in Sony buying out Ericsson. The joint venture’s objective was to create more advanced cell phones. One of the most well-known is Sony Ericsson, a joint venture between Japanese electronics giant, Sony Corporation, and Swedish telecommunications company, Ericsson, in 2001. There is no shortage of examples of joint ventures.

When considering entering into this cooperative arrangement, it’s also vital to be cognizant of the tax implications involved. How long the joint venture will be for (i.e., for a limited time or indefinitely).How losses, liabilities, and conflict will be dealt with.The bank account the joint venture will use.How the joint venture will be formed (including any relevant state laws governing it).The resources that each party will contribute.The parties involved and how they will be structured.It will also help to make the arrangement legally enforceable.Īt minimum, a joint venture agreement should include the following key terms:

Doing so will help ensure that all parties are on the same page about their respective rights and responsibilities in the joint venture. Similar to any other business arrangement, it’s important to establish the terms by which the parties intend to establish the joint venture.

Shared venture definition