Joint venture foundation

In conditions of limited access to some markets, it is more profitable for entrepreneurs to associate for a joint search for markets. A joint venture (JV) foundation is one of the forms of such an association.

Joint venture advantages:

• Decrease of production organization expenses
• Risk sharing with partners
• Direct control over the joint venture activities

At the same time, the key issues when founding a joint venture are the issues of joint venture investments, control over the joint venture activities and product protection.

Risks in foundation of joint ventures:

• Blocking key decision making
• Sudden partner withdrawal from the project
• Copying the joint venture product by partner and further self-release of the product

However, partners can level the risks out by concluding a corporate agreement when founding a joint venture. The corporate agreement will fix the terms of (about):

• Joint venture investments 
• The order of formation of the joint venture management bodies
• The profit distribution order
• Conditions of withdrawal from the joint venture
• Conditions of competition between partners.