Financial Accounting Concepts

What is Joint Venture? Meaning and Purpose

A joint venture is a business agreement between two or more parties to pool their resources and expertise to achieve a specific goal or undertake a specific project. The parties involved in a joint venture agree to share the risks, costs, and profits of the venture.

A joint venture can take many forms, such as a limited liability company (LLC), a partnership, or a corporation. Joint ventures can be formed for various purposes, such as research and development, production, marketing, or distribution of goods and services.

Joint ventures are often formed between companies from different countries, each bringing their own expertise and resources to the venture. Joint ventures can also be formed between companies from the same country to leverage complementary skills or to enter new markets.

Joint ventures can have a limited lifespan, or they can be established for an indefinite period of time. The joint venture terms, including the allocation of risks, costs, and profits, are typically negotiated and agreed upon in a joint venture agreement.

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