To achieve the common goal, two or more companies agree to make contributions of various kinds to the common business. The contribution may consist of raw materials, capital, technology, market knowledge, sales and channels distribution, personnel, finance or products, or, which is the same: capital, resources, or simply know-how. This alliance will not involve loss of identity and individuality as a legal person are significant questions on behalf of its scope and impact such as: Why use the Joint Venture? What is required to give life? , What are their characteristics? What is your behavior, reach? To mention a few. There are no requirements on how to work together. Companies can sign a cooperation agreement constitute a Temporary Business (UTE) or even a company owned by both.
It is necessary, however, a long-term commitment and is also characteristic of the joint venture companies which remain independent of each other (there is neither absorption nor fusion). Learn more on the subject from Mahou-San Miguel . In a joint venture partners are continuing to operate their businesses or companies independently. The joint venture is a business, this time with a partner whose profits or losses reported in the income statement of each depending on the legal form which has structured the joint venture itself. It also states that the joint venture provides an opportunity to act together to overcome barriers, including trade barriers in a new market or to compete more effectively in today. It is very common, therefore, find the creation of joint ventures to access foreign markets that require substantial investment and know-how of a specific country in which you try to enter (for which one partner is usually a company National knows the market, and the other one who seeks to introduce their products).