There are various ways of winning in the market place and one of them is through joint venture. When two or more parties agree together to share resources and undertake economic activity together, it is called as a joint venture. Not only the names are shared but sharing of expenses, profits and technology too takes place between the two organizatons.
Usually, an organization who starts losing grip over its existing target segment and witnesses dip in its profits commences a new success story by enabling joint venture. And the organization who stands out from it’s competitors and the one who is always ahead acquiesces by taking over another organization. But, even two good organizations can join hands together and this may happen even during the good times. A joint venture marketing can enable an organization to take new shape by maximum utilization of the combined resources. One such example of JV is Sony Ericsson. Microsoft worked together with Cisco on interoperability solutions. Hero-Honda and Maruti-Suzuki are another good examples of Indian-foreign ventures.
A joint venture can be called as one kind of marketing strategy which can work well in any kind of industry or organization. One can expect a major growth in sales if an organization effectively targets the existing set of customers either by sharing the product lines or by acquiring new markets with the same product lines. This is possible because the product list increases as well the number of customers are added up. It can be one of the most reliable methods to build better businesses within a very short span of time. But, at times it is difficult for an organization to strike a deal for partnering with another organization. It often requires a lot of effort on part of the organization to convince the other organization to go for joint venture.
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How Joint Venture can be strategically advantageous?
* An increase in the customer base: Whether you are in the business of online marketing or the regular marketing process, when you share your resources, it leads to sharing of the customer base. More the increase in number of customers, better the chances of product or service sale.
* Sharing of expenses and risks too: If the sharing of technology and human resources take place, so does sharing of expenses and risks too.
* Sharing of innovative industry practices: The two organizations share the practices followed in their organizations, enabling better use of men, material and machines.
* Better corporate image and competitive position: If the two good, profitable organizations join hands together, the image and the reputation increases in the eyes of the whole industry and the thus the JV group acquires a competitive position. The social image also gets enhanced.
* Increase in profits and growth: If the JV group works strategically, all doors can be opened to creation of better business scenario with more profits.
There must be certain mechanisms to undertake joint venture so that you do not fail in this venture.
Some of them are:
* Know your partner well
* Establish a rapport with him.
* Estimate the financial prospects.
* Set realistic goals.
The benefits certainly evokes an interest in going for JV but the pros and cons of entering into such an agreement should be seen and the prospects must be evaluated.
