Website design By BotEap.comWhat is the definition of a joint venture? It is a business alliance between at least two companies with the purpose of achieving a common goal, allowing companies to cooperate and develop their strengths. A joint venture is legally formed by signing a partnership agreement that clearly sets out the rights and obligations of each party.

Website design By BotEap.comFor example, suppose your company has a specialty, such as website design. To keep up with the number of business orders, you must continue to hire new people, outsource resources, or outsource entirely. In this situation, you may consider that it would be a better business proposition to enter into a joint venture with one of your subcontractors or outsource companies, but you should consider the advantages and disadvantages of doing so.

Website design By BotEap.comBenefits of joint ventures

Website design By BotEap.comThis type of strategic alliance between companies has several advantages, which may include the pursuit of the same objective by the partners, who remain separate entities despite the association, access to a market outside their industry, the sharing of resources , the achievement of broader mandates without having to bear the costs of a multidisciplinary team, being able to even solve the financial difficulties that any of the collaborating companies may face

Website design By BotEap.comThe responsibility of partners

Website design By BotEap.comSince the concept of joint ventures is not defined in the United States Civil Code, the courts do not seem to have accepted that this entity is a creative partnership where the liability of the members is limited. However, you can overcome this deficiency by including appropriate provisions to that effect within the joint venture agreement.

Website design By BotEap.comDistinction with subcontracting

Website design By BotEap.comBy definition, this is not related to outsourcing. In effect, outsourcing creates a relationship of contractor and client, each completely separate from the other with no aspect of sharing at all, with one party having control over the other in the business relationship. In stark contrast, these ventures are partners sharing their complementary strengths and contributions so that they can pursue the same goal and be equal and independent partners.

Website design By BotEap.comDisadvantages of Joint Ventures

Website design By BotEap.comWhat are the disadvantages, since each coin has a reverse? The disadvantages include:

• If the contract is poorly drafted, the partners’ liability for work performed and debts incurred as part of the business could become the partners’ liability.
• There is legal uncertainty around this concept in the United States
• Possible loss of control of the project (subject to the terms specified in the contract, you are not alone in the direction and, in general, each partner has a say in the activities of the company).