how to make a joint venture business plan

ZenBusinessPlans

Home » Business Plan Tips

How to Write a Joint Venture Business Plan

A joint venture business plan is a document that defines a business arrangement between two or more companies. Just as with a normal business plan, this plan also includes numerous sections and extensively describes the aim, companies, and responsibilities of each company in the joint venture. This plan also outlines temporary activities that help to attain specific goals.

Coming together to form a joint venture is nothing new in the business world. However, the real deal is to have an arrangement that equally protects the interests of each party so that everyone in the joint venture can put their best creative foot forward. Have it in mind that the best way to guarantee all parties understand their obligations and are fully participating is to put together a detailed joint venture business plan .

Although each company in the venture can put together the business plan, a legal review is often recommended to validate if the plan is legitimate. These plans are also known to be above and beyond a standard business plan. Most often, the plans will vary based on the specifics and interests of each party in the arrangement.

Steps to Write a Joint Venture Business Plan

Forming a joint venture involves several critical steps that begin with identifying and analyzing a viable joint venture partner to agree with. This sort of agreement requires well-detailed documentation and other allied/ancillary agreements. To write a solid joint venture business plan, here are steps to take;

Step 1: Write a Detailed Company Profile

Although this wouldn’t be the first page of your joint venture business plan, it is often recommended you start the writing process by first providing a brief description of each company involved in the joint venture. You have to include the management teams of each company, the resources, or goods available, and every other detail vital to the joint venture.

Consider creating a profile to briefly describe the partners in the agreement. You should also outline the expertise of each company and the reason for inclusion in the joint venture. You may also have to write a statement on the purpose of the joint venture as well.

Step 2: Spell Out your Marketing Strategies

The next step will be to discuss the market strategies you intend to leverage to achieve success for the joint venture. Just as with a normal business plan, it needs to define the market the goods and services are meant for. This section will also need to contain a thoroughly done analysis, graphs, and all other vital information that describes the market and why the joint venture will attain success.

Most often, companies in the agreement are advised to cooperate on this section to put together an analysis from each partner. Have in mind that the length and detail of this section will depend on the purpose of the joint venture; a competitive analysis may also be necessary.

Step 3: Input your Financial Projections

Note that every joint venture business plan is expected to include financial projections. While this may be the final section of the business plan, it will include information specific to product prices and cost of goods or services sold, and possible expenses from the activities.

You may need to include Pro forma financial statements in this section. Note that these statements provide a formal look at potential profits and let banks or lenders properly evaluate the venture’s possibility for success. Other statements or documents may also be included in this section.

Step 4: Your Executive Summary

Although the Executive Summary will be the first page of the joint venture business plan, it is always recommended you write it last. This page of your joint venture business plan provides a concise view of the business agreement. Depending on the joint venture activities, the section of the business plan will span anywhere from a few paragraphs to a few pages.

Important Clauses to Include in a Joint Venture Business Plan

A joint venture business plan is the bedrock of any joint venture. It outlines the objective and purpose of the joint venture. Have in mind there are ideal clauses a joint venture agreement is expected to contain. Here are very important clauses that should be inserted in the joint venture business plan:

Definitions

It is critical for every business plan to have a clause that defines all the necessary terms in the plan. This is primarily to avoid any form of misunderstanding and misinterpretation in the plan. Have it in mind that certain words or terms are given confining definitions for the purpose of interpretation of the plan. This clause will help guarantee a mutual understanding between the parties as to what a certain term means.

Parties to the Joint Venture

A joint venture business plan is meant to identify all the parties involved in a joint venture. Have in mind that there is a possibility that the original party won’t be the investing party, and the investing party may be the parent company of the original party. In such circumstances, this clause is very necessary to ensure that the joint venture agreement is binding to the investing parties as well as the original parties.

Nature of the Relationship

This is one of the most vital functions of the joint venture business plan. This clause in a business plan is meant is to outline the nature of the relationship between the joint partners, whether the parties owe any contractual obligations to one another, or whether the arrangement is just a contractual relationship where each party remains at arm’s length.

Business Objectives and Purpose of the Joint Venture

Note that this clause outlines the purpose why the joint venture was established. There are numerous reasons why businesses enter into a joint venture, from expanding their markets to completing a specific project. The purpose of the joint venture will need to be extensively considered before proceeding with finding a joint venture partner.

The Structure of the Joint Venture

This clause will have to include details about what structure the joint venture will be, such as an LLC, LLP, or incorporated. This clause shall also contain the details of the formation of the joint venture thereof. It shall also mention the registered office and the location where the joint venture will be carrying out its business.

Parties’ Contributions

This clause will note if the work will be split 50/50, who’s bringing what to the table, and what you can expect from the other person or company. Outlining this in your joint venture business plan in detail will ensure that all partner’s expectations are aligned. This is to ensure that each party understands what they will be committing to the venture, and also to ensure that they are bound by that commitment.

Distribution of Shares

The shareholding of all the partners will have to be outlined under this clause. Note that the distribution of shares is a very important aspect as the shareholdings will more or less dictate the proportion of ownership among shareholders.

Note that distributions of shares must not be 50:50; they can vary depending on the agreement between all parties. The shares can be distributed by a mutually agreed ratio or based on the capital contribution of the parties.

Rights and Obligations of the Parties

Indeed every party in a joint venture has certain rights that they can exercise and certain obligations. In the joint venture business plan, this clause will have to explain in detail everything that is expected from the parties. This is to limit or avoid future disputes and misunderstandings.

Joint venture business plans will need to explain who will manage the venture and take care of its day-to-day operations. It will also specify different levels of approval for different types of decisions.

Some joint ventures agree to establish a management committee instead of appointing the board of directors where the joint venture has been entered into for a particular short-term project. The mode of management needs to be explicitly outlined in the joint venture business plan.

Representation and Warranties

Note that these are statements of fact made by the parties entering into the joint venture. Representations and warranties are more or less made before entering into an agreement and such representations and warranties will also have to be mentioned in the joint venture business plan.

Representations and warranties are necessary so that the parties have adequate and vital information about each other such as financial standings of the parties or the loans taken by the parties, pending litigation, etc.

Indemnity Clause

Indemnity is a legal obligation on the parties to compensate the other party in case of breach of any contractual obligation. Most often, the party that suffers due to a breach of representations and warranties is entitled to be indemnified for the losses. Have it in mind that the indemnity clause will have to be fair, mutually agreed upon, and well balanced. The language and scope of this clause will also need to be clear and precise.

Dispute Resolution

In all business arrangements, there are bound to have disagreements and issues. While these issues will not always lead to litigation, it is recommended that all parties agree on a mechanism to deal with such situations.

Each party in a joint venture can be from different jurisdictions and governed by varying laws. Therefore the mechanism to resort to in case a dispute arises will need to be mutually agreed upon by the parties and explicitly noted in the plan.

Non-compete clause

This is a very important clause to include in a joint venture business plan. Depending on the nature of the agreement, it might be necessary to note that the two businesses are restricted from directly competing with one another, at least for a stipulated time. However, the non-compete clause will need to be reasonable otherwise it might be treated as a violation of a person’s fundamental right to trade.

Confidentiality

Within a joint venture agreement, parties are expected to disclose certain vital information concerning the company. Note that this information can be related to technology, trade secrets, or intellectual property. The information in the wrong hands might cause the party to incur massive losses.

This is why this clause is very important in a joint venture business plan. The clause may also need to provide that the information disclosed for the joint venture should never be used for personal gains.

Force Majeure

This clause is used to provide relief and protection to a party in a situation where the party is unable to meet some of its obligations. Note that this inability to fulfill obligations may be due to events that are totally beyond the control of the parties. The event could be a flood or an earthquake or a fire so on and so forth.

Termination

You need to understand that not every joint venture survives long and is often terminated. Owing to that, this clause will have to be included in the joint venture business plan. The termination clause centers on instances, breaches, or the occurrence of which the joint venture will be terminated.

Exit Mechanism

Even while still under an agreement, there can be many reasons why the parties would want to exit the joint venture. This could include short of funds or the joint venture going into a loss for some time. It is very common for a party to want out of the joint venture, maybe due to certain unresolved issues. Owing to that, the exit mechanism will need to be noted in the joint venture plan.

Deadlock Resolution

Deadlocks tend to arise when the parties in the joint venture have equal powers and are finding it hard to agree on a common conclusion.

Note that things like this can lead to disagreement especially when neither party is ready or willing to surrender their powers or accept the other party’s decision. While this cannot be entirely avoided in a joint venture, you should establish a mechanism that will help the parties to come to a common agreement or to resolve the deadlock.

Financial and Administrative Record Keeping

All parties in the joint venture must collaborate on maintaining their financial records. They also need to decide the process of administrative record keeping. While this may not be necessary, it is good practice for joint ventures to work with one accounting firm that is agreed upon by all members. This will help to limit the risk of any conflict of interest or complications in the future.

Intellectual Property

For joint ventures that will produce intellectual property that is of potential value to each of the parties, this clause is very necessary to avoid the risk of one party attempting to take advantage of the other’s intellectual property. This clause in the joint venture business plan should note who will own any new intellectual property created by the venture, and the extent to which the parties are permitted to use that property outside the venture.

More on Business Plan Tips

What Is a Joint Business Plan (JBP)? Benefits & Best Practices

By 8th & Walton | on October 2, 2022

From small businesses to large corporations, the most successful companies begin and stick with a clear business plan. When a company defines its goals, lays out a path to meet objectives, and agrees on financial spending and expectations, it creates a shared vision and accountability to succeed.

Many businesses experience greater growth when partnering with another business. In the supplier and retailer relationship, both parties working independently would be detrimental. To create a mutually beneficial partnership, they must begin by defining each company’s responsibilities, expectations, and needs in a joint business plan.

What Is a Joint Business Plan?

A joint business plan (JBP) is the collaborative process of planning between a retailer and a supplier in which both companies agree on short-term and long-term objectives, financial goals, growth, and shared business initiatives for profitability.

Joint business planning focuses on agreeing on common objectives and aligning on a single goal or set of goals. The companies in the joint business plan must work together to accomplish a shared vision.

What Is the Purpose of a Joint Business Plan?

For retailers and suppliers, having a joint business plan can create a win-win strategy in growing consumer sales. An effective JBP allows suppliers to build stronger relationships with their retailers so both parties can mutually support and benefit from each other.

When a retailer and supplier recognize each others’ needs and agree on common goals, they can share insights to support each other and improve sales, customer growth, and processes.

How Does a Joint Business Plan Work?

Two companies can come together with a joint business plan because they have one thing in common: a shared shopper . Whether it is a supplier partnering with a retailer or a children’s clothing company partnering with a toy manufacturer, having the same target audience is the first element that brings the companies together.

The companies considering a joint business venture should then share their individual business plans and discuss their mutual growth opportunities. This is where the general goals and areas of support can be defined. Specific tactics and category strategies can also be fleshed out in early discussions before moving to the formal process.

Once both companies are in agreement that the partnership will be mutually beneficial, the joint business plan can be created. Formal contracts are drawn up, approved, signed, and the plan is ready to be executed. Periodic reviews and necessary adjustments to the JBP are recommended as needed.

Benefits of Joint Business Planning

Why enter into a joint business plan with another company? The benefits can be not only financial but educational as well:

Aligning goals. For a retailer/supplier joint business plan, being aligned on goals creates clarity on all other areas of the business. Defining expectations on all areas from marketing to supply chain to sales goals leaves minimal area for questions. Agreeing on goals, no matter how and when they are measured, keeps both parties accountable and benefits both to meet expectations.
Shared resources and exposure. Partnering with another company can bring a new audience and a new platform. In a simple retailer/supplier joint business plan, the retailer can introduce the supplier’s product to its core shoppers. At the same time, shoppers loyal to the supplier’s product or brand can be introduced to the retailer’s store and website for the first time.
Greater return on investment. By partnering with another company with a shared vision, the benefits above will provide a better ROI when the plan is executed correctly.

Joint Business Planning Best Practices

How can companies ensure their joint business plan is a good fit for both parties? These are some best practices to include in preparation for entering into the partnership:

1. Align Internally First

Before entering into a joint business plan with another company, all members of the business must agree on the benefits of the partnership. Recognizing the advantages and seeing the bigger picture is key. When employees are in alignment within the company, it will be easier to align with the partnering company on the shared vision of the joint business plan.

2. Create the Plan Together

When two businesses enter into a partnership, the joint business plan should not be built by only one. A company sending another a complete plan or just a form to fill out is not collaborative. Both companies need to build the plan from the ground up. Collaborating in the development of the joint business plan is just as important as executing the plan itself.

3. Set Specific Goals

Expectations for success in the partnership need to be specific. “We need to grow sales” or “production costs will decrease” are good goals, but too general. Keep specifics in your plan that are as specific as they are realistic. If one company wants to grow sales by 40% in the next quarter, this should be spelled out in the joint business plan so get early support or push back from the other company.

4. Assign a Metric to Each Goal

Putting a metric with a goal keeps the company accountable to the mission of the joint business plan. For example, if the goal is to grow sales by 40% in the next quarter, it would be wise to assign a weekly growth metric. If the metric is too low over a few weeks, the plan shows that action needs to be taken immediately in order to meet the 40% sales growth goal for the quarter.

5. Communicate Responsibility and Accountability

The joint business plan is the place to eliminate all guesswork. If Company A is responsible for providing labels to Company B, be very specific about the responsible parties. Clarify that the packaging coordinator of Company A will mail the labels to the warehouse manager of Company B on the first of the month.

6. Include Risks and Solutions

Planning for setbacks is key to planning for success. The joint business plan should include any possible risks or obstacles foreseen by either company. Having solutions in place for multiple scenarios makes the plan easier to execute.

7. Constantly Evaluate the Relationship

Joint business plans work better with trust, mutual respect, and a great working relationship. Keeping the relationship healthy between the companies and individuals relying on each other brings more success to the overall plan. Monitor the relationship periodically and work to resolve conflicts as they arise.

Joint Business Plans at Walmart

Walmart works with its suppliers to create plans for sales and category growth. The company relies on suppliers to bring insights to the table to spot trends and get in front of potential gaps in the business.

Back in 2011, Walmart created a joint business plan with Proctor and Gamble to pick up lost sales in air fresheners. This category was down over 2% across the chain, but P&G brought insights to Walmart on how consumers were purchasing throughout the industry.

Consumers had no problem going to Walmart for aerosol sprays for under a dollar, but would then go to specialty stores to purchase expensive candles in the same scent. Through communicating through the joint business plan, Walmart was able to create excitement around higher price-point items and show the shared shopper they could purchase the extra items in one store.

Positive business collaborations can be extremely beneficial in growing retail sales. Two companies sharing a common vision can build on each other’s best practices and support each other to mutually win at the register.

Suppliers looking for support in their Walmart business have found great collaboration with 8th & Walton. Our team of experts supports suppliers to improve reporting, analytics, supply chain, accounting, and more. To begin a great collaboration with us, request a free 15-minute consultation this week.

About the Author

8th & Walton consists of retail industry experts with a combined 200+ years of Walmart and Walmart supplier experience. Having helped hundreds of CPG companies in their efforts to be better supplier partners to the world's most influential retailer, the 8th & Walton editorial team prides itself on being a go-to resource for Walmart supplier news and insights.

5 Essential Excel Skills for Walmart Luminate™ Users

A colorful stack of books for back-to-school shopping while dealing with inflation

Suppliers: Adjust Based on 2024 BTS Sales

how to make a joint venture business plan

Walmart DSS Sunsets: How to Prepare for Luminate™

A Guide to Joint Business Planning Best Practices

Joint business planning is a crucial aspect of fostering successful collaborations between companies. In today’s dynamic business environment, strategic partnerships have become increasingly prevalent, making it essential for organizations to adopt effective joint business planning best practices. This article will explore the key principles and strategies that contribute to successful joint business planning, providing insights […]

If you need assistance from our team, click here .

Updated at 03/21/2024
Be the first to comment.

Table of Contents

The Importance of Joint Business Planning in Today’s Market

In an era defined by rapid change and increasing interconnectivity, the significance of joint business planning cannot be overstated. This section explores how businesses can gain a competitive edge, foster shared vision, and unlock mutual growth opportunities through effective collaborative strategies.

Competitive Advantage and Shared Vision

Joint business planning serves as a catalyst for companies seeking a competitive advantage in the market. When organizations come together to strategically plan and align their strengths, they create a synergy that surpasses individual capabilities. This subsection delves into how collaborative efforts can amplify competitiveness by leveraging the unique strengths of each partner.

A shared vision is the cornerstone of successful partnerships. This subsection emphasizes the importance of establishing a common understanding of long-term goals and objectives. By aligning visions, businesses can enhance cooperation, minimize conflicts, and work towards a unified purpose. Effective joint business planning ensures that all stakeholders are on the same page, promoting a cohesive approach to achieving shared goals.

Mutual Growth Opportunities and Win-Win Strategy

Joint business planning creates a framework for identifying and capitalizing on mutual growth opportunities. This involves exploring synergies between partners, uncovering complementary strengths, and strategically leveraging resources. This subsection explores how collaborative planning facilitates the identification of avenues for joint growth, leading to mutually beneficial outcomes.

The essence of successful joint business planning lies in adopting a win-win strategy. This involves creating scenarios where all parties involved stand to gain, fostering a collaborative environment based on trust and reciprocity. This subsection delves into the principles of a win-win approach, showcasing how it not only enhances the success of partnerships but also builds a foundation for long-term, sustainable relationships.

Core Elements of Effective Joint Business Planning

Collaboration is only as strong as the foundation it is built upon. This section delves into the essential elements that underpin successful joint business planning, emphasizing the importance of aligning business strategies, sharing shopper and marketplace insights, and cultivating collaborative working relationships.

Aligning Business Strategies for Success

Central to effective joint business planning is the alignment of business strategies. This involves harmonizing the goals, tactics, and overarching plans of collaborating entities. By ensuring strategic congruence, partners can maximize the impact of their combined efforts. This subsection explores the intricacies of strategic alignment and how it forms the bedrock for successful joint business planning.

Effective joint business planning goes beyond immediate gains; it incorporates a holistic approach that integrates both short-term wins and long-term objectives. This subsection discusses how businesses can synchronize their timelines and milestones to create a comprehensive strategy that facilitates sustainable success.

Shared Shopper and Marketplace Insights

An integral aspect of joint business planning is the sharing of shopper insights. By pooling data and understanding consumer behavior and preferences, partners can tailor their strategies to meet evolving market demands.

This subsection delves into the importance of shared shopper insights and how they contribute to more informed decision-making in collaborative endeavors.

In a dynamic marketplace, staying ahead requires constant awareness. This subsection explores how joint business planning encourages the exchange of marketplace intelligence. Partners can adapt to changing trends, capitalize on emerging opportunities, and navigate challenges more effectively by combining their knowledge and resources.

Collaborative Working Relationships

At the heart of effective joint business planning is the cultivation of collaborative working relationships. Trust and open communication form the backbone of successful partnerships. This subsection explores strategies for building trust among partners and fostering an environment where transparent communication is prioritized.

Collaboration often involves navigating unforeseen challenges and capitalizing on unexpected opportunities. This subsection discusses the importance of flexibility and responsiveness in joint business planning, emphasizing the need for partners to adapt and evolve together in a dynamic business landscape.

How to Create an Effective Joint Business Plan

In the pursuit of successful collaborative ventures, crafting an effective joint business plan is paramount.

This section outlines the key steps involved in creating a robust plan, covering aspects such as setting joint objectives, resource allocation, and addressing legal considerations.

1. Setting Joint Objectives and Account Management

The foundation of any joint business plan lies in establishing clear and achievable objectives. This subsection explores the importance of defining shared goals, aligning strategies, and ensuring that all stakeholders are committed to a common purpose. Clear objectives provide a roadmap for collaborative efforts, guiding partners toward mutual success.

Effective account management is crucial for the seamless execution of joint business plans. This involves assigning responsibilities, creating accountability structures, and establishing communication channels.

Delving into the intricacies of strategic account management, this subsection highlights how a well-organized approach contributes to the overall success of collaborative initiatives.

2. Resource Allocation and Shared Resources

Resource allocation is a critical aspect of joint business planning, ensuring that both parties contribute and benefit equitably.

This subsection explores strategies for optimizing the allocation of financial, human, and technological resources. By balancing contributions, businesses can enhance efficiency and maximize the impact of their collaborative efforts.

Collaborative ventures often involve the pooling of resources to achieve common goals. This subsection delves into the concept of shared resources, emphasizing how partners can leverage each other’s strengths to overcome challenges and capitalize on opportunities.

Efficient utilization of shared resources enhances the overall effectiveness and sustainability of joint initiatives.

3. Formal Contracts and Legal Aspects

A crucial step in creating an effective joint business plan is the establishment of formal contracts. This subsection explores the importance of clearly defined agreements, covering aspects such as roles and responsibilities, dispute resolution mechanisms, and exit strategies.

Robust contractual frameworks provide a solid foundation for trust and transparency between collaborating entities.

Navigating the legal landscape is essential for the success and longevity of joint business ventures.

This subsection delves into the legal aspects involved in collaborative efforts, addressing issues such as intellectual property, confidentiality, and compliance. Understanding and addressing legal considerations from the outset safeguards the interests of all parties involved.

Best Practices for Joint Business Planning Execution

Effective execution is the linchpin of successful joint business planning. This section explores best practices that organizations can adopt to ensure the seamless implementation of collaborative strategies, including the use of performance metrics, monitoring, accountability, and value chain analysis.

1. Performance Metrics and KPIs

Setting and monitoring performance metrics are essential elements of joint business planning execution. This subsection delves into the process of defining key performance indicators (KPIs) that align with the shared objectives of the collaborative venture.

By establishing measurable benchmarks, organizations can gauge the success of their efforts and make informed decisions to optimize performance.

Performance metrics should not be static; instead, they should be subject to continuous evaluation. This subsection emphasizes the importance of regularly assessing KPIs, analyzing performance data, and adapting strategies based on the evolving needs of the collaboration.

A dynamic approach to performance measurement ensures that joint business plans remain responsive to changing market conditions.

2. Monitoring and Accountability

Effective monitoring is a cornerstone of successful joint business planning execution. This subsection explores proactive monitoring strategies, including the use of technology, regular communication channels, and real-time data analysis.

By staying vigilant and responsive, organizations can identify potential issues early on and take corrective actions to maintain the trajectory toward shared goals.

Clear accountability structures are vital for the success of collaborative ventures. This subsection delves into the importance of defining roles, responsibilities, and expectations within the partnership.

Establishing accountability structures fosters a sense of ownership among all stakeholders, ensuring that each party contributes actively to the joint business plan’s execution.

3. Value Chain Analysis and Multi-functional Execution

Conducting a value chain analysis is a best practice that can significantly enhance joint business planning execution. This subsection explores how organizations can identify value-creation opportunities at each stage of the collaboration.

By optimizing the value chain, partners can streamline processes, reduce costs, and deliver enhanced value to customers.

Collaborative ventures often involve the integration of multiple functions within each organization. This subsection discusses the importance of multi-functional execution, emphasizing the need for seamless coordination across departments.

By breaking down silos and promoting cross-functional collaboration, organizations can ensure the holistic implementation of joint business plans.

Creating Value Through Customer Focus

In today’s customer-centric business landscape, creating value for consumers is at the forefront of successful joint business planning.

This section explores strategies for placing customers at the center of collaborative efforts, enhancing consumer sales, and elevating the overall customer experience.

How to Create Value for Customers Through Joint Business Planning

A fundamental step in creating value through joint business planning is gaining a deep understanding of customer needs and preferences. This subsection explores how organizations can leverage market insights, customer feedback, and data analytics to identify and prioritize customer-centric initiatives.

By aligning collaborative strategies with customer expectations, businesses can create offerings that resonate with their target audience.

Effective joint business planning involves co-creating solutions that address specific customer pain points. This subsection emphasizes the importance of collaboration in ideation and product development, showcasing how partnerships can bring together diverse perspectives and expertise to deliver innovative solutions.

Co-created offerings not only meet customer needs but also differentiate the collaborative venture in the market.

Consumer Sales and Customer Experience

Joint business planning can significantly impact consumer sales by optimizing distribution channels, expanding market reach, and aligning sales strategies. This subsection explores how organizations can leverage their collaborative efforts to boost consumer sales. Whether through joint marketing initiatives, bundled offerings, or cross-promotions, aligning sales strategies enhances the overall success of the partnership.

Customer experience is a critical differentiator in today’s competitive market. This subsection delves into how joint business planning can be structured to elevate the customer experience.

From seamless transactions to personalized interactions, collaborative ventures can enhance every touchpoint in the customer journey. Focusing on customer satisfaction not only builds loyalty but also contributes to the long-term success of the collaborative partnership.

In conclusion, the journey through the intricacies of joint business planning best practices has highlighted the pivotal role that effective collaboration plays in today’s dynamic business environment.

From aligning business strategies and setting joint objectives to executing plans with a customer-centric focus, the success of collaborative ventures hinges on a thoughtful and strategic approach.

Frequently Asked Questions (FAQs)

What are the key metrics to measure the success of a joint business plan.

Measuring the success of a Joint Business Plan involves tracking key metrics such as revenue growth, market share expansion, customer satisfaction, cost savings, return on investment (ROI), and adherence to compliance and risk mitigation.

These metrics provide a comprehensive evaluation of the collaborative venture’s impact on both financial and operational aspects, ensuring a holistic assessment of the plan’s effectiveness.

How do you resolve conflicts during the Joint Business Planning process?

Resolving conflicts during the Joint Business Planning process requires an open communication approach, identification of root causes, and, when needed, the involvement of a neutral third party for mediation.

A clear definition of roles and responsibilities, the establishment of conflict resolution protocols within the joint business plan, and a focus on shared objectives contribute to addressing conflicts promptly and fostering a collaborative environment.

What role do executive sales leaders play in Joint Business Planning?

Executive sales leaders play a pivotal role in Joint Business Planning by strategically aligning sales efforts with overall business goals, contributing to resource allocation discussions, cultivating relationships with key stakeholders, providing market insights, and overseeing the performance of sales teams.

Their involvement ensures that sales strategies complement the collaborative venture’s objectives, driving success in terms of revenue and market impact.

How often should a Joint Business Plan be reviewed and updated?

The frequency of reviewing and updating a Joint Business Plan varies but commonly involves quarterly reviews for timely adjustments based on market changes and annual updates for comprehensive reassessment of long-term goals. Additionally, trigger events such as major market shifts or significant internal changes may prompt unscheduled reviews.

Adapting the frequency based on the dynamic nature of the business environment ensures the plan remains relevant and responsive to evolving conditions.

Are there any software tools that can facilitate Joint Business Planning?

Various software tools facilitate Joint Business Planning, offering features such as collaboration, data analysis, project management, and document sharing. Platforms like Microsoft Teams, Slack, or Asana enhance communication, while tools such as Tableau or Power BI aid in data analysis. Project management software like Trello or Jira helps in planning and tracking progress, and CRM systems like Salesforce or HubSpot centralize customer interactions and sales activities. The selection of tools depends on the specific needs and preferences of the collaborating organizations.

Chemical Inventory Management Software: Maximize Safety

Streamline your lab safety and compliance with our cutting-edge chemical inventory management software. Efficient tracking, simplified reporting.

RFIC: What is a radio frequency integrated circuit and how does it work?

Discover the essentials of RFICs, their pivotal role in wireless tech, and how they drive modern communication systems to new heights.

Understanding ROU Asset Tax Treatment Essentials

Discover how ROU asset tax treatment can affect your financials and learn to navigate the complexities of depreciation and tax implications effectively.

What is Lease Term 1 Mos? Understanding Short-Term Leases

Explore the intricacies of a lease term 1 mos – your guide to navigating the nuances of short-duration rental agreements.

Walmart RFID Mandate: What You Need to Know

Discover the essentials of Walmart’s RFID mandate and how it impacts suppliers. Learn about compliance requirements and the benefits of this retail technology.

Leading RFID Label Manufacturers | Custom Solutions

Discover top RFID label manufacturers offering custom solutions for asset tracking and inventory management. We provide high-quality smart labels and RFID tags for your business needs.

RFID Integration: Elevate Your Inventory Management

Explore the transformative potential of RFID integration in your inventory management to streamline operations and boost efficiency.

inventory services for warehouses in Maryland

Maryland Warehouse Inventory Services | Optimize Management

Elevate your Maryland-based warehouse’s efficiency with our top-notch inventory services. Expert solutions for tracking, control, and optimization.

RFID Tracking for Reusable Transport Items (RTIs)

In today’s fast world,

RFID Architecture in a Shopfloor: Seamless Integration

Explore how RFID architecture in a shopfloor can streamline your inventory management and boost operational efficiency.

Advanced Identification Solutions: Products, Fixed Assets, Animals and People

Explore our advanced identification solutions for secure asset and identity management across people, animals, and fixed assets.

LPN Barcode Solutions for Efficiency

Explore our LPN barcode solutions to streamline your inventory tracking and enhance operational efficiency. Unlock the power of precision in logistics.

Effective Operating Room Inventory Management

Discover how effective operating room inventory management optimizes surgical supply tracking, reduces waste, and improves patient care in healthcare facilities.

Fixed Asset Tagging System: Streamline Inventory Management

Discover how our fixed asset tagging system revolutionizes inventory management. Streamline tracking, reduce errors, and boost efficiency. Implement smarter asset control today.

Indefinite-Lived Intangible Assets: Key Insights

Explore indefinite-lived intangible assets with our comprehensive guide. Learn about valuation, accounting, and management of these crucial business assets.

Asset Tracking in Hospitals: Enhance Efficiency

Discover how our advanced asset tracking solutions optimize hospital operations, improve patient care, and reduce costs. Streamline your healthcare facility today.

Surgical Inventory Management Solutions

Optimize your surgical inventory management with CPCON’s cutting-edge solutions. Streamline processes, reduce costs, and enhance patient care in your healthcare facility.

UHF RFID Clothing Hang Tag Market: Industry Analysis

Explore the growing UHF RFID clothing hang tag market. We analyze trends, applications, and key players shaping the future of apparel tracking and inventory management.

RFID Vehicle Tracking System: Monitoring in Real Time

Discover how our RFID vehicle tracking system enhances fleet management, improves security, and optimizes operations with real-time monitoring and data-driven insights.

RFID Work Clothes: Smart Solutions for Your Business

Discover how RFID work clothes revolutionize workforce management, enhance safety, and streamline inventory control. Explore our smart solutions for your business today.

Recent Content

Explore the intricacies of a lease term 1 mos - your guide to navigating the nuances of short-duration rental agreements.

With over 25 years of experience, the CPCON Group is the global advisor that enhances and maximizes organizations’ internal control, promoting increased management efficiencies, improved regulatory compliance and financial supervision.

More about CPCON

80 Broad Street, 5th Floor, Manhattan, 10004

[email protected] +1 (201) 366-2960

Cliobra | Fully Managed Blogging Business

Joint Business Plan (JBP): Benefits, Best Practices & Objectives

Recent Posts

How to Start a Credit Repair Business in Texas? (Practical Guide) - March 6, 2024
How to Start a Corporate Housing Business? (Step-by-Step Guide) - March 6, 2024
How to Start a Cleaning Business in NJ? (Practical Guide) - March 5, 2024

Last Updated on November 28, 2023 by Arif Chowdhury

Imagine two retail brands, each with their own unique strengths and market presence. Now picture the joint business venture, with two partnering business partners, joining forces to conquer a new market together through joint ventures. This is the power of partnering with other teams in a company – a joint business plan , where executive summaries are created to outline shared goals and maximize potential.

Collaboration is vital in today’s competitive industry landscape. By forming joint ventures, companies can pool their resources, expertise, and networks to unlock new opportunities, expand their reach, and drive growth like never before.

Joint ventures allow companies to collaborate and create stronger teams , leading to increased success. A joint business plan serves as the blueprint for this collaborative venture, outlining key objectives, strategies, and tactics that both parties will execute together.

A well-crafted joint business plan typically includes an executive summary that outlines the purpose and scope of the collaboration. It also details specific marketing initiatives such as promotions or product launches aimed at capturing the target market’s attention. It covers aspects like distribution channels, branding efforts, and sales projections to ensure alignment between both parties.

In this blog post series on joint business plans, we will explore the importance of collaboration in driving success for retailers and companies in today’s fast-paced retail industry. Collaboration is crucial for the success of ventures in the retail industry.

We will delve into the key components of an effective joint business plan and provide real-life examples to illustrate its impact. So buckle up as we embark on this exciting journey towards collaborative success!

Benefits of implementing a joint business plan

Implementing a joint business plan can bring numerous benefits to retailers and companies involved in the venture. Let’s explore some of these advantages in detail:

1. Increased Alignment and Synergy between Partners

One of the key benefits of implementing a joint business plan is the increased alignment and synergy between partners. When all parties in a joint venture are working towards a shared goal, it becomes easier to align joint venture strategies , joint venture objectives, and joint venture activities.

Why teamwork is vital for joint business?

This alignment fosters collaboration and teamwork in the venture, allowing partners to leverage each other’s strengths and expertise.

Better coordination between teams.
Shared vision leads to improved decision-making.
Enhanced trust and mutual understanding.

Example: Imagine two companies collaborating on a marketing campaign. With a joint venture business plan in place, both companies can align their messaging, target audience, and promotional activities for maximum impact.

2. Enhanced Communication and Coordination

Another significant benefit of a joint business plan is the improvement in communication and coordination among partners.

Clear channels of communication are established, ensuring that information flows seamlessly between all parties involved. This enhanced communication enables faster problem-solving, timely decision-making, and efficient resource allocation.

Regular meetings facilitate open dialogue.
Improved sharing of information and knowledge.
Quick resolution of conflicts or issues.

Example: In a joint business plan between a manufacturer and distributor, regular communication helps them stay updated on market trends, customer feedback, and inventory levels. This enables them to make informed decisions regarding production volumes, delivery schedules, and product promotions.

3. Improved Resource Allocation and Cost Optimization

Implementing a joint business plan allows partners to optimize resource allocation effectively. By pooling resources together strategically, partners can reduce duplication of efforts while maximizing efficiency.

Resource Allocation and Cost Optimization for joint business

This collaborative approach also helps in identifying cost-saving opportunities by streamlining processes or leveraging economies of scale.

Shared resources lead to reduced costs.
Elimination of redundant activities.
Efficient use of available assets.

Example: Two companies in the logistics industry can collaborate on a joint business plan to optimize their transportation routes, thereby reducing fuel costs, minimizing delivery times, and maximizing the utilization of their fleets.

Recommended Reading: Esthetician Business Plan [Free Downloadable Template]

Best practices for successful joint business planning

1. establishing clear goals and objectives.

To ensure a successful joint business plan, it is crucial to establish clear goals and objectives . This means clearly defining what you want to achieve together with your partner or stakeholders. By setting specific targets, you can align your efforts towards a common purpose.

One way to do this is by using category management principles. This involves analyzing market trends, consumer behavior, and competitive landscape to identify opportunities for growth. By understanding the category dynamics, you can develop strategies that capitalize on market trends and consumer preferences.

2. Regular Communication and Feedback Among Stakeholders

Effective communication is key in any collaborative effort, including joint business planning. Regularly communicating with your partners and stakeholders helps maintain alignment and fosters a sense of shared responsibility.

By providing feedback throughout the planning process, you can address any issues or concerns promptly. This allows for adjustments to be made in real-time, ensuring that everyone remains on track towards achieving their goals.

3. Creating a Structured Timeline with Defined Milestones

A structured timeline with defined milestones is essential for keeping joint business planning on track. Breaking down the plan into smaller, manageable tasks helps ensure progress is made consistently.

Structured Timeline with Defined Milestones is essential for any business success

Consider creating a Gantt chart or project timeline that outlines key activities, deadlines, and responsible parties. This visual representation provides clarity on the sequence of tasks and allows for better coordination among team members.

Establishing milestones helps measure progress along the way. Celebrating these achievements boosts morale and keeps everyone motivated throughout the planning process.

4. Developing a Win Strategy

A win strategy focuses on identifying how both parties involved can benefit from the joint business plan. It aims to create mutually beneficial outcomes that drive growth for all stakeholders.

When developing a win strategy, consider factors such as market share gains, revenue growth opportunities, cost savings through economies of scale, or access to new markets or distribution channels.

Recommended Reading: Dump Truck Business Plan [Free Downloadable Template]

Evaluating the progress of a joint business plan

To ensure the success of a joint business plan, it is crucial to regularly evaluate its progress. This evaluation allows you to monitor key performance indicators (KPIs), conduct reviews and assessments, and make necessary adjustments to stay on track.

Monitoring Key Performance Indicators (KPIs)

Monitoring KPIs is an essential step in evaluating the progress of a joint business plan. These performance metrics provide valuable insights into the effectiveness of your plan and help you gauge its success. By tracking KPIs, such as sales growth, revenue generated, or customer satisfaction levels, you can assess whether your joint business plan is delivering the desired results.

Some key performance indicators that are commonly monitored include:

Sales performance: Keep an eye on how well your products or services are selling. Track factors like sales volume, average transaction value, and conversion rates.
Promotional effectiveness: Evaluate the impact of marketing campaigns and promotions on driving sales. Measure metrics like click-through rates, website traffic generated from promotions, or coupon redemption rates.
Product performance: Assess how well specific products are performing in terms of sales numbers, customer feedback, or market share gained.
Customer satisfaction: Monitor customer feedback and ratings to determine if your joint business plan is meeting their expectations.

Conducting Regular Reviews and Assessments

Regular reviews and assessments are vital for evaluating the progress of a joint business plan. Schedule periodic meetings with all stakeholders involved in the partnership to discuss achievements, challenges faced, and areas that require improvement.

These reviews provide an opportunity to analyze data collected from KPI monitoring and gather insights from each party’s perspective.

During these sessions:

Share research findings: Present any relevant market research or consumer insights that can inform decision-making processes.
Discuss results achieved: Review the outcomes achieved so far based on set goals and objectives outlined in the joint business plan.
Identify bottlenecks and risks: Identify any obstacles or risks that may be hindering progress and brainstorm potential solutions.
Collaborate on adjustments: Work together to determine necessary adjustments or modifications to the joint business plan, ensuring it remains aligned with changing market dynamics.

Recommended Reading: Missouri Small Business Loans: Rates, Requirements & Funds

Making Necessary Adjustments to Stay on Track

Flexibility is key when evaluating the progress of a joint business plan. As you monitor KPIs and conduct reviews, you may identify areas where adjustments are required to maximize success. Making these necessary adjustments allows you to adapt your strategies, overcome challenges, and capitalize on emerging opportunities.

Consider the following steps for making adjustments:

Analyze data: Examine the data collected from KPI monitoring and reviews to identify trends or patterns that require attention.
Identify areas for improvement: Pinpoint specific areas within the joint business plan that need adjustment based on performance gaps or changing market conditions.
Collaborate with partners: Engage in open discussions with your partners to gather their input and insights regarding potential adjustments.
Develop action plans: Create detailed action plans outlining the necessary steps to implement changes effectively.
Monitor results: Continuously monitor the impact of these adjustments on performance metrics and assess their effectiveness.

By regularly evaluating the progress of your joint business plan, monitoring KPIs, conducting reviews, and making necessary adjustments, you can enhance its chances of success. This iterative process ensures that your joint business plan remains aligned with evolving market dynamics and increases your likelihood of achieving mutually beneficial outcomes.

Recommended Reading: Copywriter for Small Business: Get The Maximum Result

Finding the right partner for joint business planning

Identifying the ideal partner for joint business planning is crucial to the success of any collaborative endeavor .

It requires careful consideration of various factors, including complementary strengths and expertise, compatibility in terms of values and culture, as well as conducting due diligence before entering into an agreement.

Identifying Complementary Strengths and Expertise

When seeking a business partner for joint business planning, it’s essential to identify individuals or organizations with complementary strengths and expertise. This means looking for partners who possess skills and resources that complement your own.

For example, if you’re a manufacturer looking to expand your distribution channels, partnering with a retailer or distributor who has established relationships with consumers can be highly advantageous.

Consider the following when assessing complementary strengths:

Look for partners who excel in areas where you may have limitations or gaps.
Seek out individuals or organizations that bring unique perspectives and capabilities to the table.
Evaluate potential partners based on their track record of success in relevant areas.

Assessing Compatibility in Terms of Values and Culture

In addition to complementary strengths, compatibility in terms of values and culture is vital for a successful partnership. When embarking on joint business planning, you’ll be working closely together towards shared goals.

Therefore, aligning values and having a similar organizational culture can foster effective collaboration.

Here are some considerations when assessing compatibility:

Evaluate whether your partner shares similar core values such as integrity, transparency, and customer-centricity.
Assess whether there is alignment in terms of long-term objectives and vision.
Consider how well your respective cultures will blend together to create a harmonious working relationship.

Conducting Due Diligence Before Entering into an Agreement

Before finalizing any partnership agreement, it’s crucial to conduct thorough due diligence. This involves gathering information about potential partners to ensure they are reliable, trustworthy, financially stable, and have a good reputation within their industry.

Here are some steps to consider during the due diligence process:

Research: Conduct extensive research on potential partners, including their history, financials, and reputation.
References: Reach out to their existing or past business partners to gather insights into their reliability and performance.
Legal Assistance: Engage legal professionals to review contracts and agreements to ensure they protect your interests.
Pilot Projects: Consider starting with small-scale pilot projects to test compatibility before committing to a long-term partnership.

Recommended Reading: LinkedIn Search Appearances: Boost Your Profile

Maintaining a common vision and strategic objectives

To ensure the success of a joint business plan, it is crucial to maintain a common vision and strategic objectives with your partner. This involves aligning long-term goals and ensuring a shared understanding of strategic priorities. By continuously reinforcing the importance of collaboration, you can foster a strong partnership that drives mutual growth.

Aligning Long-Term Goals with the Partner’s Vision

When embarking on a joint business plan, it is essential to align your objectives with your partner’s vision.

This alignment ensures that both parties are working towards a common goal and have a clear understanding of each other’s expectations. By taking the time to understand your partner’s vision, you can identify areas where your goals intersect and collaborate effectively.

Ensuring Shared Understanding of Strategic Priorities

In order to execute a successful joint business plan, it is vital to establish shared understanding of strategic priorities.

This involves open communication and regular discussions about the strategies and tactics that will be employed to achieve desired outcomes. By aligning your strategies with those of your partner, you can create synergy and maximize the impact of your joint efforts.

Continuously Reinforcing the Importance of Collaboration

Collaboration is key in any joint business plan, as it allows for the pooling of resources, expertise, and networks. To maintain effective collaboration throughout the partnership, it is important to continuously reinforce its importance.

This can be done through regular check-ins, open communication channels, and providing support where needed. By fostering an environment that encourages collaboration, you can build trust and strengthen the relationship with your partner.

Maintaining a common vision and strategic objectives in a joint business plan requires strong leadership and effective strategy execution. It involves aligning long-term goals with your partner’s vision, ensuring shared understanding of strategic priorities, and continuously reinforcing the importance of collaboration.

You raise the chance of reaching win-win results if you keep this alignment throughout the collaboration. Recall that effective collaborative company planning needs constant communication and a dedication to collaborating to achieve shared objectives.

Recommended Reading: Pink Friday Small Business: Boost Sales with Events

Resources to help you get started with joint business planning

Creating a joint business plan can seem like a daunting task, but fear not! There are plenty of resources available to assist you in this process.

Let’s explore some of these resources that can help you get started with joint business planning.

Online Templates for Creating Joint Business Plans

One helpful resource is the availability of online templates specifically designed for creating joint business plans. These templates provide a structured framework that allows you to outline your goals, strategies, and actions in a clear and organized manner.

With pre-defined sections and prompts, these templates make it easier for you to navigate through the planning process.

Saves time and effort by providing a ready-made structure.
Ensures consistency and completeness in your joint business plan.
Provides guidance on what information to include in each section.
May lack customization options for unique business needs.
Requires careful adaptation to fit your specific partnership dynamics.

Industry-Specific Case Studies Showcasing Successful Collaborations

Another valuable resource is industry-specific case studies that showcase successful collaborations between businesses. These case studies offer real-life examples of how joint business planning has been implemented effectively across various industries.

By examining these success stories, you can gain insights into best practices, challenges faced, and strategies employed by others in similar partnerships.

Offers practical examples that demonstrate the benefits of joint business planning.
Provides inspiration and ideas for implementing collaborative strategies.
Helps identify potential pitfalls and ways to overcome them.
May not directly align with your unique partnership situation.
Limited availability of industry-specific case studies may restrict options for certain sectors.

Expert Guides on Effective Partnership Management

To further support your joint business planning efforts, expert guides on effective partnership management are available as well. These guides provide comprehensive advice on building strong partnerships, fostering collaboration, managing conflicts, and maximizing mutual benefits.

They offer valuable insights from experienced professionals who have navigated the complexities of joint business planning.

Offers expert advice and proven strategies for successful partnership management.
Provides step-by-step guidance on various aspects of joint business planning.
Helps you avoid common pitfalls and challenges associated with partnerships.
Requires careful adaptation to your specific partnership dynamics.
May not address industry-specific nuances or challenges.

Recommended Reading: How to Start a Photography Business with No Experience (A Step-by-Step Guide)

Frequently Asked Questions (FAQs)

Can any type of business benefit from joint business planning.

Absolutely! Joint business planning is applicable across industries and sectors. Whether you’re a small startup or an established corporation, collaborating with another company through joint business planning can bring numerous benefits such as increased market share, cost savings through shared resources, access to new customer segments, enhanced product offerings, and improved overall competitiveness.

How do I find the right partner for joint business planning?

Finding the right partner for joint business planning starts with identifying companies that complement your strengths and fill gaps in your capabilities. Look for organizations with similar values and strategic objectives but different areas of expertise that can add value to your offerings.

Networking events, industry conferences, trade associations, online platforms are great places to connect with potential partners. Take the time to build relationships, assess compatibility, and ensure alignment before diving into joint business planning.

What are some common challenges in joint business planning?

While joint business planning offers numerous benefits, it can also come with its fair share of challenges. Common obstacles include differences in organizational culture and decision-making processes, conflicting priorities and objectives, resource allocation issues, and communication breakdowns.

The key to overcoming these challenges is open and transparent communication, mutual respect, and a willingness to compromise when necessary.

How do you evaluate the progress of a joint business plan?

Evaluating the progress of a joint business plan requires establishing clear metrics and milestones at the outset. Regularly review these indicators to gauge performance against targets.

Maintain open lines of communication with your partner to address any concerns or roadblocks that may arise along the way. By regularly assessing progress and making necessary adjustments, you can ensure that your joint business plan remains on track towards achieving its objectives.

Are there any resources available to help me get started with joint business planning?

Yes! There are several resources available to assist you in getting started with joint business planning. Industry publications, online forums, webinars, and workshops often provide valuable insights and best practices for successful collaboration.

Consulting firms specializing in strategic partnerships can offer guidance tailored to your specific needs. Don’t hesitate to tap into these resources as you embark on your joint business planning journey.

In today’s competitive business landscape, collaboration is key to success. That’s where joint business planning comes in. By partnering with another company and aligning your goals and strategies, you can unlock a whole new level of growth and profitability. Joint business planning allows you to pool resources, share expertise, and leverage each other’s networks to achieve mutually beneficial outcomes.

But it’s not just about the immediate gains. Joint business planning sets the foundation for long-term partnerships built on trust and shared vision. It enables you to navigate challenges together, adapt to market changes swiftly, and seize opportunities that may have been out of reach individually. By working hand in hand with a like-minded partner, you can amplify your impact and create a powerful synergy that propels both businesses forward.

Ready to tap into the power of joint business planning? Start by evaluating potential partners who align with your values and objectives. Establish open lines of communication, set clear expectations, and define measurable goals together. Remember, successful joint business planning requires ongoing collaboration and commitment from both parties. With the right partner by your side, there’s no limit to what you can achieve together.

Credit cards
View all credit cards
Banking guide
Loans guide
Insurance guide
Personal finance
View all personal finance
Small business
Small business guide
View all taxes

You’re our first priority. Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners .

What Is a Joint Venture and How Does It Work?

Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

As a small-business owner, you need a collaborative mindset to succeed. You need to develop solutions with employees, business partner, and investors on a regular basis. Sometimes, you might have a great business idea that requires expertise or resources from another individual or company. In this case, you might consider entering into a joint venture with that individual or company.

LLC Formation

$0 + state fees

What is a joint venture?

A joint venture is an agreement by two or more people or companies to accomplish a specific business goal together. A joint venture can be structured as a separate business entity or simply grow out of a contract between the parties. Unlike a partnership, a joint venture is typically temporary, dissolving after the task is complete.

But how does a joint venture work? What are the possible benefits (and risks) of this kind of arrangement? We're here to help.

In this guide, we'll explain more about joint ventures, discuss the benefits and risks — plus, we'll review how a joint venture compares to other types of business entities as well as how to start one for your business.

How a joint venture works

Expanding upon our joint venture definition above, this type of agreement allows you to come together with one or more other individuals or businesses to carry out a specific project. Joint ventures are particularly common in the real estate, media, and technology sectors.

When it comes down to it, business owners enter into joint ventures to access new markets, tap into complementary skill sets, or combine resources. The concept of a joint venture can be confusing because there’s a degree of collaboration and independence.

Two or more people or companies come together in a joint venture for a specific purpose. However, the parties don’t have any legal responsibilities to each other beyond the scope of the joint venture.

Characteristics of a joint venture

Generally, a joint venture consists of each of the following characteristics:

The parties undertaking the joint venture are legally independent, with the exception of the work they do together during this collaboration.

The parties set out to accomplish a specific, mutually beneficial goal.

Both parties contribute resources, share ownership of the joint venture’s assets and liabilities, and share in the implementation of the project.

The joint venture is temporary (but can be short or longer-term), dissolving once the goal is reached.

Overall, the key to this arrangement is that both parties contribute to it and share in the opportunities and risks.

This being said, however, the contributions don’t need to be equal. For instance, one party might manufacture the product, and the other party might offer a distribution channel. One party might offer 70% of the money, while the other might bring just 30%.

No matter how you split contributions and profits though, each party is fully liable for anything that might go wrong with the joint venture.

As an example, let’s say two real estate developers launch a joint venture to build an apartment building. A bystander gets injured by construction debris that one of the developers leaves behind. Under the law of every state, both developers will share fully in the liability if the bystander sues, even though only one was responsible for the accident.

The only way to eliminate this shared liability is to form a legally separate entity for the joint venture (which we'll explain below). Although a joint venture doesn't require that you form a separate entity, many businesses choose to take this route.

Joint venture agreement

The terms of a joint venture should be documented in a written joint venture agreement. Although a written contract isn’t legally required to establish a joint venture, it's the best way to ensure that each party is committed to the shared effort and knows what is expected of them.

The contract should specify what each party will contribute to the joint venture, each party’s rights and duties, and how much each party will profit from the venture, similar to a partnership agreement.

Overall, just like any type of business collaboration, without a written agreement, joint ventures can fall apart due to disagreement between the parties, and therefore, it's worth taking the time to draft and agree upon a contract from the beginning.

Joint venture examples

Joint ventures can be useful in any situation where distinct companies have complementary resources and a shared goal. The examples of joint ventures you’ve read about might have been two mega corporations coming together, but small business owners can benefit from this type of arrangement, as well.

According to Washington, D.C.-based business attorney Joy R. Butler, “If you think a joint venture is the exclusive territory of Fortune 500 companies, think again. Joint ventures offer the option of pooling resources with others, so you don’t have to go it alone. Your joint venture might be as straightforward as sharing a customer list for a combined marketing campaign… or providing original content for a website.”

Here are some joint venture examples:

Two mobile phone companies agree to share their network.

A transportation provider and network provider join forces to provide Wi-Fi on the transportation platform.

Multiple real estate developers work together to build a shopping complex.

A restaurant teams up with a big distributor to get their products into supermarkets nationwide.

Two car companies pair up to conduct research about fuel efficiency.

These examples are all inspired by real-life joint ventures.

For instance, BMW and Toyota formed a joint venture in 2015 to develop a vehicle powered by hydrogen fuel cells. And back in 2009, Vodafone and Telefónica joined hands to share their mobile network infrastructure across parts of Europe, a deal that allowed both companies to save millions.

Joint venture alternatives

Although joint ventures may seem similar to other types of business arrangements — and sometimes the term "joint venture" is used interchangeably with terms like "partnership," joint ventures are unique.

With this in mind, it's important to understand how joint ventures differ from other business arrangements:

Joint ventures vs. partnerships

A general partnership is a specific type of business structure where two or more people govern a company together. The partners share in the profits and losses of the business.

Unlike a joint venture, a partnership is typically designed to last indefinitely. Joint ventures are usually temporary and initiated for a specific project, though they have more permanence than a simple licensing or distribution agreement, particularly when larger companies are involved.

However, there are some similarities between joint ventures and partnerships, the main one being liability.

“A joint venture is similar to a partnership, but courts typically distinguish between them by finding that joint ventures are usually for one single project or transaction, whereas partnerships typically are longer-lived,” explains Professor Michael Molitor of Cooley Law School at Western Michigan University. “But in any event, whether it is a partnership or a joint venture, the partners or joint venturers will be personally liable for the business’s debts.”

Joint ventures vs. franchises

In a franchise, the parent company grants a license to run a business using the parent company’s name, brand and operating methods — some examples include McDonald’s, Subway, UPS and other low-cost franchises .

Usually, a franchise is a long-term arrangement, and the franchisee pays an initial fee to the franchisor for the right to operate the business. Additionally, the franchisor exerts a certain degree of control over the franchisee’s business decisions. In a joint venture, neither party is in “control,” and both contribute toward a shared goal.

Joint ventures vs. licensing

Licensing is similar to franchising because the licensor permits the licensee to use the company’s name and logo. The licensee manufactures products and pays a royalty fee to the licensor for the rights to use the brand.

With joint ventures, on the other hand, both parties work together to reach a common goal and assume equal liability should something go wrong with the project.

Joint ventures vs. mergers or acquisitions

In a merger, two companies combine to become a single business entity. Sometimes, two companies of similar size come together, like Exxon-Mobil.

Alternatively, a large company could acquire the assets of a smaller company. The purpose of a merger is usually to capture new market share, and an acquisition is often used to buy out a smaller competitor.

In contrast, the purpose of a joint venture is to achieve a common goal, and each party maintains its independence.

Joint ventures vs. qualified joint ventures

A qualified joint venture is a partnership that’s run by spouses, each of whom participates in managing the business.

For tax purposes, the IRS allows each spouse to file a Schedule C for their portion of the business income and losses, in the same way that sole proprietors do.

Benefits and risks of a joint venture

Before we explain how to form a joint venture, you might be wondering about the benefits — and the risks — of such an arrangement. This type of collaboration seems simple enough, especially in comparison to the other business arrangements we listed, so, is there a reason why you wouldn't agree to a joint venture with another business?

In short, there are two sides to consider before agreeing to a joint venture with another business or individual. Let's start with the possible benefits:

Benefits of joint ventures

Your business can gain access to markets, resources, people, capital, technology, etc. that you wouldn't have otherwise.

You can reduce competition — especially if you're working with a direct competitor.

By working with another individual or business, you can more easily accomplish a goal or objective that would have been difficult on your own — which hopefully leads to an increase in profits.

You may be able to bypass time-consuming business license or regulatory requirements by working with a company that has already met those requirements.

You can designate a specific part of your business to work on a joint venture project with another business, without having to completely combine your organizations.

Risks of joint ventures

On the other hand, of course, there are possible drawbacks associated with entering into this type of agreement:

You may find it difficult to work with the other business and have to sort through disputes.

The joint venture could end badly and result in wasted time, effort, money and resources.

The project or goal you've taken on through the joint venture could end up failing.

You can open yourself up to additional liability and other legal risks by working with another business (especially if you don't create a separate entity for the joint venture).

As you can see, there are both advantages and disadvantages to forming a joint venture and you'll want to weigh these points against one another before deciding if this type of arrangement is right for your business.

How to form a joint venture in 5 steps

As we've explained, companies or business owners commonly form a joint venture to access new markets, gain an edge over competitors, or tap into complementary resources. Therefore, if you think this type of arrangement may be a worthwhile opportunity for your business, here are the steps you'll need to take to form one:

1. Find a partner

First, finding a joint venture partner (or more than one partner for larger joint ventures) starts with clearly defining your objective. For instance, perhaps you’ve developed a new product but lack wide distribution channels to get it into stores. You can ask fellow business owners what distributors they use and do some independent market research. Then, reach out to different distributors to gauge their interest in a joint venture.

This being said, you should evaluate the people who you'll be working with both in terms of their skills or knowledge and their cultural fit. Obviously, they must be able to prove the reach of their distribution channels.

However, you should also assess how committed they are to the final goal. Can you trust the people in charge? What’s the financial condition of the company, and what are their financial expectations from the joint venture? Does the firm have any other commitments or conflicts of interest that would hurt this arrangement?

When trying to find a partner, you should be prepared for a lot of negotiation and back and forth in the process of forming your arrangement. You might need to exchange production schedules, customer lists and other proprietary details with your would-be partner, and they’ll need to share their own information.

To protect the confidential information of everyone involved, it’s a good idea to prepare and sign a mutual nondisclosure agreement.

2. Choose a type of joint venture

After you've found a partner, your next step will be to structure your joint venture.

As we've discussed, there are two ways to do this:

Form a separate legal entity for the joint venture, such as a corporation or limited liability company, with each party having an ownership stake in the new entity.

Operate under a joint venture agreement without creating a separate legal entity. This is called an unincorporated joint venture.

Just as is the case with forming a joint venture itself, there are both advantages and disadvantages to the two structure options.

Forming a separate legal entity for your joint venture is the more expensive and complex option. If you form a corporate joint venture, for example, the joint venture will be responsible for filing and paying its own business taxes. However, having a separate legal entity also provides more legal protection if something goes wrong.

The faster, less expensive option is to get started with a simple contractual arrangement. In this case, the joint venture doesn’t report any profits of its own and doesn’t pay taxes on its own. The profits flow through to the respective parties’ tax returns.

If you’re exploring a joint venture for a narrowly defined purpose where liability isn’t much of a concern, it might be fine to get started this way. For a more complicated joint venture, on the other hand, it’s safest to establish a separate legal entity.

3. Draft a joint venture agreement

Once again, no matter what type of joint venture you create, you should draft a joint venture agreement that contains all the details of how it will be run. You can start with a joint venture agreement template, like the one shown above, to create your own agreement for your specific arrangement. Depending on the business you're working with and the risks associated with the joint venture, however, you might also decide to consult a business attorney for assistance.

This being said, at a minimum, your joint venture agreement should contain the following information:

The purpose of the joint venture.

Formation process (i.e. if the arrangement will be a separate entity or established by contract).

How the parties will allocate profits and losses, which need not be equal (though an outside claimant is free to sue either or all parties).

Each party’s contributions, which need not be equal.

What duties each party is responsible for to ensure the joint venture’s success.

Meeting schedule to decide on important matters.

Voting rights of each party.

When the joint venture will end.

Overall, when you're drafting and signing the joint venture agreement, it’s a good idea for both parties to have legal representation as part of the process.

4. Pay taxes

As with any profit-seeking enterprise, you must pay taxes when you’re part of a joint venture. As we mentioned above, the taxation of your joint venture depends on how the arrangement is structured.

If you form a separate legal entity, any profits of the joint venture will be taxed based on the entity type. For example, C corporations pay a 21% flat income tax rate on business profits, and shareholders pay taxes again on dividends. LLCs, on the other hand, are taxed as pass-through entities, which means the business income and losses are reflected on each owner’s tax return.

Unincorporated joint ventures are similar to LLCs in terms of tax treatment. The profits of the joint venture flow through to the parties to report on their individual tax returns, in line with their respective share of the profits as outlined in the joint venture agreement.

If the parties to the joint venture are corporations, then each corporation reports the joint venture income on their corporate tax return. An unincorporated joint venture doesn’t itself complete a business tax return.

5. Follow other applicable regulations

Finally, you'll want to make sure you follow any other regulations that might apply to your joint venture at the local, state, or federal level.

For instance, if you’re “borrowing” employees from either company that is a party to the arrangement, you’ll need an employer identification number and to follow other labor laws. Depending on which industry your joint venture belongs to, you might need a business license to operate.

And if you’re considering a cross-border joint venture, a host of international regulations come into play that might limit your ability to operate in other countries.

The bottom line

Joint ventures can be beneficial, even critical, to making a business idea a reality when you need someone else’s resources, market knowledge, or skill set to accomplish a specific project. However, a joint venture also opens you up to risks and liability, particularly if you don’t form a separate legal entity for it.

Therefore, as we've discussed, if you decide to enter into a joint venture with another individual or business, it's important that you understand the possible risks, as well as draft a thorough agreement to help mitigate those risks, in order to put your endeavor on the best path to success.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

On a similar note...

One blue credit card on a flat surface with coins on both sides.

Joint Business Plan: What It Is and How to Create One with Your Partners

Are you struggling to align your business goals with your partners? Look no further than a joint business plan. This collaborative approach allows for clear communication, shared expectations, and ultimately, success. Learn how to create one with our guide and take your partnership to the next level.

Joint Business Plan What It Is and How to Create One with Your Partners

Recent Posts

Chiropractic Business Plan: How to Attract and Retain Loyal Customers - August 3, 2023
The Major Thrust of Corporate Entrepreneurship is to Create Value and Competitive Advantage - July 31, 2023
Entrepreneurship Owning Your Future: How to Take Charge of Your Career and Life - July 28, 2023

Are you tired of working with partners who seemingly have different priorities? Does your business lack direction or goals that are aligned with the vision and values of your company? Well, we have good news for you! A joint business plan might just be the solution you need. A joint business plan is a powerful tool that enables you and your partners to set clear objectives, develop strategies, allocate responsibilities, and align your efforts toward a shared vision. So, whether your business is just taking off or it’s been around for a while, a joint business plan can help ensure its success. In this article, we will guide you through the process of creating a joint business plan with your partners, step by step. Trust us; this is something you don’t want to miss!

1. unleashing the power of joint business plans, 2. why joint business planning is crucial for your partnership, 3. collaboration that works: how to create joint business plans, 4. the benefits of joint business planning, 5. step-by-step guide to crafting joint business plans, 6. assessing your partnership: the first step in joint business planning, 7. aligning your goals: a key element in crafting joint business plans, 8. creating the perfect joint business plan: tips and strategies, 9. implementing and executing your joint business plan, 10. evaluation and review: tools for improving your joint business plan, 11. taking your partnership to the next level with joint business planning.

12. Closing Thoughts: Harnessing the Power of Collaboration with Joint Business Planning

Our Readers Ask

Final thoughts.

Joint business plans (JBPs) are the secret recipe for unlocking formidable results in business. JBPs involve collaboration between two or more companies to craft a strategic plan aimed at delivering mutual benefits. When companies partner using JBPs, they can leverage each other’s strengths and use them for the benefit of the collective. This strategic collaboration also enables companies to share risks, maximize profits and enhance their competitive advantages.

Successful JBPs require comprehensive planning, execution, and review. Companies involved in JBPs must align their visions and goals to minimize conflicts and create a symbiotic relationship. With proper planning and strategy, JBPs can help companies create fresh opportunities, increase market share, boost sales, and drive innovation. By working together, companies can achieve what they would have failed to accomplish independently. It’s high time businesses embraced JBPs as they have a proven track record of expanding boundaries and growing businesses beyond what they thought possible. Through JBPs, businesses can harness existing experience, put their strengths to work, and foster productive partnerships to achieve valuable results.

Joint business planning is an essential aspect of building a successful partnership. At the heart of any partnership is the goal of achieving shared success, but this can’t be achieved without a clear plan in place. Joint business planning involves setting out a detailed, actionable plan that identifies specific goals, milestones, and responsibilities. Successful partnerships are built on a foundation of collaboration, and joint business planning is the cornerstone of this.

One of the key benefits of joint business planning is that it creates a shared understanding of what success looks like. This helps all parties to work towards the same goals, aligning their efforts to achieve a common purpose. Joint business planning also promotes accountability and transparency, providing a clear framework for measuring progress and evaluating success. By working together to develop a joint business plan, all parties have a clear view of what needs to be done, how it will be achieved, and who is responsible for delivering it. In short, joint business planning is crucial for any partnership that wants to achieve sustained success.

Creating joint business plans can lead to effective collaboration between businesses. When creating these types of plans, it’s crucial to have a clear understanding of each other’s objectives and goals. By working together, businesses can help each other identify any potential roadblocks and develop strategies to overcome them.

When developing a joint business plan, communication is key. Each party should be open to sharing their ideas and concerns. It’s essential to discuss each other’s strengths and weaknesses and to create a plan that will allow both businesses to benefit. By working together, businesses can find new opportunities to grow their customer base and improve their products and services. To ensure that the plan is successful, both parties should commit to it and stay focused on the end goal.

Joint business planning is a powerful approach that brings together two or more companies to work together strategically. It involves close collaboration to achieve common goals, share resources, and most importantly, boost profitability. The idea behind joint business planning is to create a win-win situation for all companies involved.

One of the significant benefits of joint business planning is stronger relationships between companies. This approach helps to foster positive relationships between partners, which can lead to long-term collaboration. Moreover, joint business planning allows each business to bring its strengths to the table. This helps to create a much stronger overall strategy, which can be leveraged to gain a competitive advantage. In turn, this can lead to increased revenue and profitability for all parties involved. Joint business planning is a valuable tool for any company looking to expand its revenue streams and reach new customers while maintaining quality relationships with its partners.

Crafting a joint business plan with your partner can be a daunting process. But don’t worry, we have compiled a step-by-step guide to make this process as smooth as possible. So grab your favorite drink, sit back, and let’s get started!

1. Align your Goals & Objectives: The first step in crafting a successful joint business plan is aligning your goals and objectives with your partner. It is crucial to have a clear understanding of each other’s vision, values, and desired outcomes. Identify your strengths, weaknesses, opportunities, and threats to come up with a plan that leverages both partners’ strengths and mitigates weaknesses. Keep an open mind and be flexible as the process of aligning your goals can take time. Remember, the goal is to build a sustainable and mutually beneficial partnership. 2. Identify KPIs & Milestones: Once you have aligned your goals, it’s time to get down to business and identify the key performance indicators (KPIs) and milestones that will help measure progress towards your goals. These KPIs should be specific, measurable, achievable, relevant, and time-bound. It’s also essential to set realistic milestones that will help you track progress against the plan. The key is to focus on a few critical KPIs and milestones that will drive the desired outcomes. Remember, it’s better to have a few well-defined KPIs than too many that can cause confusion and lack of focus.

Assessing your partnership is the crucial first step in joint business planning. Your success in business hinges on the strength and health of your partnership, so it’s crucial to determine and evaluate where you stand in terms of communication exchange, accountability, and performance.

It’s essential to assess if you and your partner(s) have a clear understanding of roles, responsibilities, and goals. This process involves reviewing each partner’s contribution to the business, identifying strengths and weaknesses, and decision-making strategies. We recommend identifying Critical Success Factors (CSFs) to measure the progress of your partnership. CSFs could include customer satisfaction, productivity, quality of work, and timely completion of tasks. This assessment should be repeated at regular intervals, at least once a year.

When crafting joint business plans, aligning your goals with your partner’s is crucial. Without this, you may find yourselves hitting roadblocks or even worse, going in completely opposite directions. To avoid this, it’s essential to communicate clearly and frequently with your partner and make sure everyone is on the same page.

One effective way to align goals is to create a shared vision. This should include a clear understanding of what both parties hope to achieve and how it will benefit each other. Don’t be afraid to brainstorm and get creative in generating ideas for this vision. Once it’s established, use it as a reference point and constantly refer back to ensure you’re both working towards the same goals. With a clear vision in place, you’ll have the foundation needed to drive your joint business plan forward.

Joint business plans are essential for successful partnerships, and creating the perfect one requires careful planning and execution. A well-crafted business plan can help you and your partner brainstorm innovative ideas, establish goals, and identify potential challenges and solutions. To ensure that you create a joint business plan that meets both of your expectations, consider the following tips and strategies.

1. Define your goals and objectives: Before starting, it’s essential to define the goals and objectives of your partnership. Take the time to understand each other’s business priorities, strengths, and weaknesses, and how you can complement each other. Clarifying your goals will help you set the direction for the business plan.

2. Communication is critical: Good communication is vital when creating a joint business plan. Make sure you and your partner are on the same page and have open lines of communication throughout the process to capture new ideas and avoid misunderstandings. Regular meetings and progress updates will also help keep everyone aligned and ensure that you stay on track toward your goals. With these tips and strategies, your partnership can be successful and result in a formidable joint business plan.

Now that you and your partner have crafted a comprehensive joint business plan, it’s time to put it into action. The success of your partnership relies heavily on how well you execute the plan. In this section, we’ll cover some essential steps to take in implementing your joint business plan.

First, it’s vital to assign responsibilities correctly. You and your partner should establish clear roles and expectations for each team member involved. Don’t leave any room for confusion or ambiguity. Next, create a timeline with specific deadlines for action items. Once you’ve established a timeline, stick to it as closely as possible. Make sure to communicate frequently with your partner to make sure progress is being made. Lastly, be prepared to make some adjustments along the way, as things may arise that are beyond your control. By working together proactively and communicating effectively, you can successfully execute your joint business plan and achieve your business objectives.

As with any business strategy, evaluating and reviewing your joint business plan is crucial to its success. By doing so, you can identify areas where you need to adjust your approach and make changes that will help you achieve your goals. Fortunately, there are several tools you can use to make this process easier.

First, consider using a SWOT analysis. This involves analyzing your plan’s strengths, weaknesses, opportunities, and threats. You can use this information to refine your strategy and make it more effective. Other tools include regular check-ins with your partner, tracking your progress with specific metrics, and seeking feedback from customers and other stakeholders. Whatever method you choose, make sure you are regularly evaluating your plan’s effectiveness and making changes as needed to stay on track.

Another critical tool for improving your joint business plan is to conduct regular reviews. This can involve reviewing your progress against your goals, analyzing any roadblocks or challenges you’ve encountered, and brainstorming new ideas for growth and development. These reviews should be conducted on a regular basis and involve all stakeholders to ensure that everyone is on the same page and working towards the same goals. By taking the time to evaluate and review your plan, you can ensure that you are always moving forward and continually improving your partnership.

Now that you have established a great partnership with another business, it’s time to take things to the next level. Joint Business Planning is a strategic process that allows both businesses to work together to create a plan that benefits all parties involved. This is an excellent opportunity to align goals, prioritize initiatives, and create a roadmap for success.

Joint Business Planning involves collaboration, communication, and open-mindedness. Both businesses should be willing to share insights, resources, and challenges to achieve the best possible outcomes. Through this process, you can identify opportunities to grow revenue, increase market share, and optimize operations. Moreover, this process ensures that both parties are on the same page in terms of timelines, budgets, and expected outcomes.

Here are some tips to ensure that your Joint Business Planning process is successful:

-Create a shared vision and mission statement that aligns with both businesses’ core values and objectives. -Develop a clear methodology that outlines goals, strategies, and metrics for success. -Identify areas of expertise and assign individuals to take responsibility for specific tasks. -Set realistic timelines and budgets for project phases. -Be transparent, open-minded, and willing to compromise for the greater good.

By investing time and effort in Joint Business Planning, you can take your partnership to the next level and achieve great things together.

12. Harnessing the Power of Collaboration with Joint Business Planning

Joint Business Planning (JBP) is not just another fancy corporate buzzword. It represents a powerful tool that allows collaborators to examine their respective strengths and weaknesses to achieve a common goal. Collaborative teamwork that rests on transparency, honesty, and mutual trust is key to the success of a JBP. In this era of intense competition, JBP has become an essential component of the business strategy that enables companies to survive and grow. Therefore, companies that are willing to harness the power of collaboration as facilitated by JBP are best positioned to succeed in today’s marketplace.

Remember, the JBP process is not a one-time event. It is a continuous process that requires the active participation and commitment of all parties involved. JBP has proven to enhance cohesiveness, efficiency and ultimately the profitability of businesses. It gives the collaborators the best chance of achieving their goals in a way that benefits all parties. Harnessing the power of JBP enables businesses to save costs, reduce risks, and increase revenues by tapping into the knowledge, resources, and expertise of others with complementary skills. So, put your ego aside, and start exploring the benefits of JBP, as it is a proven method to achieve success in the world of commerce.

Q: What is a joint business plan? A: A joint business plan is a document created in collaboration with your business partners that outlines key objectives, strategies, tactics, and timelines for achieving common goals. It’s essentially a roadmap for success that everyone can agree on and work towards achieving.

Q: Why is creating a joint business plan essential? A: Creating a joint business plan is crucial because it helps align the objectives and strategies of all parties involved. It reduces misunderstandings and conflicts that may arise from different interpretations of goals and expectations. Additionally, it ensures that everyone is on the same page and working towards the same end result.

Q: How do you create a joint business plan with your partners? A: To create a joint business plan, start by coordinating with your partners to determine shared objectives, values, and priorities. Next, identify key performance indicators (KPIs) and milestones to help measure progress and track success. Develop targeted strategies and tactics for achieving these goals, and establish clear timelines and accountability measures.

Q: Who should be involved in the joint business plan process? A: Ideally, all partners should be involved in the joint business plan process. This includes stakeholders, executives, managers, and other key decision-makers. However, the specific roles and responsibilities of each individual may vary depending on the nature of the partnership and the goals outlined in the plan.

Q: What are some benefits of using a joint business plan? A: The benefits of using a joint business plan are many. It helps increase accountability, promote collaboration, and improve communication between partners. It also helps avoid misunderstandings and conflicts that can arise from differing interpretations of goals and expectations. Overall, it’s a powerful tool for achieving business success.

Now that you know about joint business plans, it’s time to take the leap with your partners and start creating a practical roadmap for your business. With a solid plan in place, you can achieve your goals faster and achieve success with ease. Remember, collaboration is key in every business, and in joint planning, you get to leverage the strengths of every partner, to maximize your output. So, don’t hold back, get your partners together, and create an effective joint business plan today. Trust me; it’s the best decision you’ll make for your business!

Business Writer

A dynamic business writer with a talent for uncovering the latest trends and innovations in the world of startups and entrepreneurship. With a background in finance and a passion for storytelling, Morgan’s articles offer a unique perspective on the challenges and opportunities facing today’s business leaders.

Small Business Flight Plan: How to Plan, Execute and Achieve Your Business Goals in 2023

Small business owners dream of taking their enterprises to new heights, but without the right flight plan, those aspirations can stay grounded. With 2023 fast approaching, it’s time to buckle up and develop a robust roadmap for achieving those business goals. Here’s how to take off and soar to success.

7 Stages of Business Growth: What They Are and How to Navigate Them Successfully

Every business goes through a series of stages as they grow and evolve. Understanding these stages can help entrepreneurs navigate the journey from startup to thriving business. In this article, we’ll explore the 7 stages of business growth and provide tips for successfully navigating each one.

Chiropractic Business Plan: How to Attract and Retain Loyal Customers

Are you struggling to attract and retain loyal customers to your chiropractic business? Look no further! A solid business plan is the key. From creating a welcoming atmosphere to maintaining consistent communication, we’ve got the tips you need to succeed. Let’s get started!

Business Exit Strategy Consulting: How to Plan and Execute a Successful Exit Strategy for Your Business

If you’re a business owner, preparing an exit strategy may not be at the top of your to-do list. However, planning for an eventual exit ensures that you’ll be able to maximize your company’s value and benefit from your hard work. In this article, we’ll explore why exit strategy consulting is important, and provide you with tips for planning and executing a successful exit strategy for your business.

Business Continuity Management Framework: A Guide to Best Practices and Standards

Business Continuity Management Framework is essential for ensuring that organizations can continue to operate even in the face of disruptions. This guide provides a comprehensive overview of best practices and standards to help organizations develop effective BCM strategies. By following these guidelines, businesses can safeguard their operations and minimize the impact of disasters.

Working Capital Management: Why It Matters for Small Businesses and How to Optimize It

Working capital is a key element in the survival of small businesses. It involves managing the cash flow of a company, ensuring that it has enough money to cover its day-to-day expenses. Effective working capital management allows small businesses to invest in growth opportunities and avoid financial risks. This article discusses the importance of working capital management for small businesses and provides tips on how to optimize it.

The Secrets To Successful Joint Ventures

By Arnaud Leroi and Philip Leung

It may be time to reconsider joint ventures.

For years, many business leaders viewed joint ventures as unpopular and not particularly successful tools for developing a business or optimizing costs. But new Bain & Company research has found surprising evidence to the contrary. In fact, overall, the value of joint ventures grew 20% annually from 1995 to 2015—that’s twice the rate of M&A deals.

In our global survey of 253 companies that used joint ventures to spur growth or optimize their product mix, more than 80% of the participants told us that the deals met or exceeded expectations.

What do these companies do right? They develop the talents and routines to make joint ventures successful and understand the fundamental difference between joint ventures and M&A. For example, if an acquisition goes off course, the acquirer has the power to take all the steps required to shift direction. But with a joint venture, you can’t start over. You need to have the right foundation in place before the deal is signed, with solid agreement on strategy and ways of working—as well as on how to end the deal when the time is right.

Create a repeatable model

Working with companies on more than 450 joint ventures, we’ve learned that the best partners create a repeatable model for success. They establish a sound strategic foundation, with clear deal objectives. They operate with an aligned joint venture architecture, and with deal structures that prepare the partners for evolving scenarios, setting up the deals for healthy integration or solid ongoing management. They also carefully manage leadership transitions. As a result, the partners prevent a host of potential challenges, such as unclear roles, slow decision making and an inability to resolve disputes.

Related: Maximizing Your Merger's Potential

Winners conduct careful evaluations before jumping in. They operate under the assumption that joint ventures work only when everybody wins. In successful joint ventures, top management is involved from the start, and stays involved. The best companies also overinvest in governance and partner-fit assessment up front, explicitly identifying possible future challenges and anticipating ways to change the joint venture model to accommodate a new market or environment. They tailor the specifics based on the type of deal—scope or scale. For example, in scope joint ventures, they adopt a “start-up” approach and focus on growing the pie. In scale deals, they adopt a “merger integration” approach and emphasize cost sharing.

Setting up a joint venture for success

Companies need to tie their joint venture objectives to corporate growth strategy, first assessing whether a joint venture is a better option than organic growth or acquisitions. Winners conduct detailed market and competitor analysis and business planning to ensure there is a clear value-creation potential for each partner. Next, they assess partner fit based on a comprehensive set of predefined criteria, such as strategic intent, decision-making style, risk approach and culture. They develop “what-if” scenarios to anticipate potential misalignment and related response strategies. And they define a joint venture business plan, perimeter and structure, as well as the key principles for a future operating model, from both a parent and joint venture perspective.

After assessing partner fit, the next step is to design the joint venture and negotiate the deal. That involves answering a host of questions: What should the joint venture look like, and what operating model will be most effective? What’s the best way to align interests and structure the deal?

In our experience, the best companies build a sustainable joint venture organization and governance structure designed as much for flexibility as for effectiveness. Also, they identify additional mechanisms that will ease the day-to-day operations and preserve the strategic intent and balance of power.

Once a deal has been designed and negotiated, it’s time to create the joint venture itself and take the steps needed to deliver the desired results.

Success can depend on the partners’ ability to focus the organization on the most critical decisions that will maximize the joint venture’s value while ruthlessly prioritizing the initiatives that will deliver the most value. It’s important to resolve people issues early, getting the leadership in place to start building a new culture as soon as possible.

The best companies fully anticipate that conditions will change. For a joint venture to survive, it must adapt to those changes—everything from shifts in market conditions to changes in management at a parent company. It’s a challenge to keep the spirit and intent of the founders alive, even after four or five rotations of management. Fortunately, companies can ensure successful lifetime management. For example, monitoring systems can enable continuous assessment of changing performance and conditions, helping companies determine when it’s time to refresh or refocus a joint venture’s strategic foundation to capture its full potential.

Ideally, the parent companies and management will arrange for two types of meetings during a deal’s lifetime. They will establish a monthly or quarterly schedule of performance-management meetings to review short-term progress. The partners will also set up a series of less frequent meetings—every two or three years, for example—with the goal of reviewing the strategy and refreshing it, if required.

Another big requirement for success: knowing from the very beginning of a joint venture how to handle disputes and how the venture should end. For example, when a dispute or litigation arises, partners need to proactively manage the arbitration with a dedicated team to support the process. And exit strategies must be clearly determined in advance. Parties need to agree on the mechanisms to manage a separation the right way—or to renegotiate the deal.

Companies increase their odds of successful joint ventures if they invest in building and maintaining a strong joint venture capability. Those that anticipate few deals or low-value deals, or expect to have a relatively small percentage of their overall activity under joint ventures, can rely on a joint venture knowledge-management program. However, companies that intend to make joint ventures a key part of their growth strategy should establish an exclusive joint venture team to provide proactive support and supervise all joint ventures at the business unit or central level.

Read more: Tapping The Unexpected Potential Of Joint Ventures

Arnaud Leroi is a Bain & Company partner based in Paris who leads the firm’s Mergers & Acquisitions practice in Europe, the Middle East and Africa.

Philip Leung is a Bain partner in Shanghai who leads the firm’s M&A practice in Asia-Pacific.

SUGGESTED TOPICS
The Magazine
Newsletters
Managing Yourself
Managing Teams
Work-life Balance
The Big Idea
Data & Visuals
Reading Lists
Case Selections
HBR Learning
Topic Feeds
Account Settings
Email Preferences

Launching a World-Class Joint Venture

James Bamford,
David Ernst,
David G. Fubini

JVs and alliances can deliver more shareholder value than M&As can, but getting them off the ground can trip you up in unpredictable ways.

Reprint: R0402G

More than 5,000 joint ventures, and many more contractual alliances, have been launched worldwide in the past five years. Companies are realizing that JVs and alliances can be lucrative vehicles for developing new products, moving into new markets, and increasing revenues. The problem is, the success rate for JVs and alliances is on a par with that for mergers and acquisitions—which is to say not very good.

The authors, all McKinsey consultants, argue that JV success remains elusive for most companies because they don’t pay enough attention to launch planning and execution. Most companies are highly disciplined about integrating the companies they target through M&A, but they rarely commit sufficient resources to launching similarly sized joint ventures or alliances. As a result, the parent companies experience strategic conflicts, governance gridlock, and missed operational synergies. Often, they walk away from the deal.

The launch phase begins with the parent companies’ signing of a memorandum of understanding and continues through the first 100 days of the JV or alliance’s operation. During this period, it’s critical for the parents to convene a team dedicated to exposing inherent tensions early. Specifically, the launch team must tackle four basic challenges. First, build and maintain strategic alignment across the separate corporate entities, each of which has its own goals, market pressures, and shareholders. Second, create a shared governance system for the two parent companies. Third, manage the economic interdependencies between the corporate parents and the JV. And fourth, build a cohesive, high-performing organization (the JV or alliance)—not a simple task, since most managers come from, will want to return to, and may even hold simultaneous positions in the parent companies. Using real-world examples, the authors offer their suggestions for meeting these challenges.

More than 5,000 joint ventures, and many more contractual alliances, have been launched worldwide in the past five years. The largest 100 JVs currently represent more than $350 billion in combined annual revenues. So it’s become clear to many companies that alliances—both equity JVs (where the partners contribute resources to create a new company) and contractual alliances (where the partners collaborate without creating a new company)—can be ideal for managing risk in uncertain markets, sharing the cost of large-scale capital investments, and injecting newfound entrepreneurial spirit into maturing businesses.

JB James Bamford ( [email protected] ) is a senior managing director at Ankura, where he serves a global client base across industries on joint venture and partnership issues. He previously founded Water Street Partners and co-led the joint venture and alliance practice at McKinsey & Company.
DE David Ernst ( [email protected] ) is a senior managing director at Ankura, where he works with clients across the globe, in all phases of the joint venture life cycle from deal making to restructuring and exit. He previously founded Water Street Partners and previously co-led the joint venture and alliance practice at McKinsey & Company.
DF David G. Fubini is a senior partner in McKinsey’s Boston office and leads its global organization and postmerger management practices.

Partner Center

Please note that the contents of this site are not being updated since October 1, 2023.

As of October 2, 2023, Acclr Business Information Services (Info entrepreneurs) will be delivered directly by CED’s Business Information Services . To find out more about CCMM’s other Acclr services, please visit this page: Acclr – Business Services | CCMM.

Advice and guidance
Starting a business
Personalized Guidance
Seminars on Business Opportunities
Certification of Export Documents
Market Studies
Export Financing
International Trade Training
Connection with the World Bank
Trade Missions
SME Passport
Export Resources
Import Resources
Networking Activities
Networking Training
CCMM Member Directory
Market Studies and Research Services
Business plan
Registration and legal structures
Guidance for Drafting a Business Plan
Help in Seeking Funding
News, Grants, and Competitions
Funding Meet-and-Greet
Resources for Drafting a Business Plan
Regulations / Permits / Licences
Personalized Market Information Research
Personalized Meetings with Guest Experts
Government Subsidies and Programs
Training for your employees
Employee Management
Interconnection Program
Wage Subsidies
French courses
Merchant-Student Pairing
Intellectual property
Marketing and sales
Operations management
Hiring and managing human resources
Growth and innovation
Importing and exporting
Calls for tenders
Support organizations
Sale / Closure / Bankruptcy
Business intelligence
Business lists and profiles
Market data
Market trends
Business advice
Business plan management consultant
Legal structures consultant
Accounting consultant
Legal consultant
Export certification
Resource centre

Joint ventures and partnering

A joint venture involves two or more businesses pooling their resources and expertise to achieve a particular goal. The risks and rewards of the enterprise are also shared.

The reasons behind forming a joint venture include business expansion, development of new products or moving into new markets, particularly overseas.

Your business may have strong potential for growth and you may have innovative ideas and products. However, a joint venture could give you:

more resources
greater capacity
increased technical expertise
access to established markets and distribution channels

Entering into a joint venture is a major decision. This guide provides an overview of the main ways in which you can set up a joint venture, the advantages and disadvantages of doing so, how to assess if you are ready to commit, what to look for in a joint venture partner and how to make it work.

Types of joint venture

Joint venture - benefits and risks, assess your readiness for a joint venture, plan your joint venture relationship, choosing the right joint venture partner, create a joint venture agreement, make your joint venture relationship work, ending a joint venture.

How you set up a joint venture depends on what you are trying to achieve.

One option is to agree to co-operate with another business in a limited and specific way . For example, a small business with an exciting new product might want to sell it through a larger company's distribution network. The two partners could agree to a contract setting out the terms and conditions of how this would work.

Alternatively, you might want to set up a separate joint venture business , possibly a new company, to handle a particular contract. A joint venture company like this can be a very flexible option. The partners each own shares in the company and agree on how it should be managed.

In some circumstances, other options may work better than a business corporation. For example, you could form a business partnership . You might even decide to completely merge your two businesses.

To help you decide what form of joint venture is best for you, you should consider whether you want to be involved in managing it. You should also think about what might happen if the venture goes wrong and how much risk you are prepared to accept.

It's worth taking legal advice to help identify your best option. The way you set up your joint venture affects how you run it and how any profits are shared and taxed. It also affects your liability if the venture goes wrong. You need a clear legal agreement setting out how the joint venture will work and how any income will be shared. See the page in this guide on how to create a joint venture agreement.

Businesses of any size can use joint ventures to strengthen long-term relationships or to collaborate on short-term projects.

A successful joint venture can offer:

access to new markets and distribution networks
increased capacity
sharing of risks and costs with a partner
access to greater resources, including specialised staff, technology and finance

A joint venture can also be very flexible. For example, a joint venture can have a limited life span and only cover part of what you do, thus limiting the commitment for both parties and the business' exposure.

Joint ventures are especially popular with businesses in the transport and travel industries that operate in different countries.

The risks of joint ventures

Partnering with another business can be complex. It takes time and effort to build the right relationship. Problems are likely to arise if:

the objectives of the venture are not 100 per cent clear and communicated to everyone involved
the partners have different objectives for the joint venture
there is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners
different cultures and management styles result in poor integration and cooperation
the partners don't provide sufficient leadership and support in the early stages

Success in a joint venture depends on thorough research and analysis of aims and objectives. This should be followed up with effective communication of the business plan to everyone involved.

Setting up a joint venture can represent a major change to your business. However beneficial it may be to your potential for growth, it needs to fit with your overall business strategy.

It's important to review your business strategy before committing to a joint venture. This should help you define what you can realistically expect. In fact, you might decide that there are better ways to achieve your business aims. See our guide on how to assess your options for growth .

You may also want to look at what other businesses are doing, particularly those that operate in similar markets to yours. Seeing how they use joint ventures could help you choose the best approach for your business. At the same time, you could try to identify the skills they apply to partner successfully.

You can benefit from examining your own business. Be realistic about your strengths and weaknesses - consider performing a SWOT (strengths, weaknesses, opportunities and threats) analysis to discover whether the two businesses are a good fit. You will almost certainly want to find a joint venture partner that complements your own business' strengths and weaknesses.

You should take into account your employees' attitudes and bear in mind that people can feel threatened by a joint venture. It can also be difficult to build effective working relationships if your partner has a different way of doing things.

If you do decide to form a joint venture, it may well help your business to grow faster, increase productivity and generate greater profits. Joint ventures often enable growth without having to borrow funds or look for outside investors. You may also be able to use your joint venture partner's customer database to market your product, or offer your partner's services and products to your existing customers. Joint venture partners also benefit from being able to join forces in purchasing, research and development.

Before starting a joint venture, the parties involved need to understand what they each want from the relationship.

Smaller businesses often want to access a larger partner's resources, such as a strong distribution network, specialist employees and financial resources. The larger business might benefit from working with a more flexible, innovative partner, or simply from access to new products or intellectual property.

Similarly, you might decide to build a stronger relationship with a supplier. You might benefit from their knowledge of new technologies and get a better quality of service. The supplier's aim might be to strengthen their business from a guaranteed volume of sales to you.

Whatever your aims, the arrangement needs to be fair to both parties. Any deal should:

recognise what you each contribute
ensure that you both understand what the agreement is expected to achieve
set realistic expectations and allow success to be measured

The objectives on which you agree should be turned into a working relationship that encourages teamwork and trust. See the page in this guide on how to make your joint venture relationship work.

The ideal partner in a joint venture is one that has resources, skills and assets that complement your own. The joint venture has to work contractually, but there should also be a good fit between the cultures of the two organisations.

A good starting place is to assess the suitability of existing customers and suppliers with whom you already have a long-term relationship. You could also think about your competitors or other professional associates. Broadly, you need to consider the following:

How well do they perform?
What is their attitude to collaboration and do they share your level of commitment?
Do you share the same business objectives?
Can you trust them?
Do their brand values complement yours?
What kind of reputation do they have?

If you opt to assess a new potential partner , you need to carry out some basic checks:

Are they financially secure?
Do they have any credit problems?
Do they already have joint venture partnerships with other businesses?
What kind of management team do they have in place?
How are they performing in terms of production, marketing and personnel?
What do their customers and suppliers say about their trustworthiness and reputation?

Before you consider signing up to a joint venture, it's important to protect your own interests . This should include drawing up legal documents to protect your own trade secrets and finding out whether your potential partner holds intellectual property rights agreements. Also, it's worth checking to see whether they have other agreements in place, either with their employees or consultants.

When you decide to create a joint venture, you should set out the terms and conditions in a written agreement . This will help prevent any misunderstandings once the joint venture is up and running.

A written agreement should cover:

the structure of the joint venture, e.g. whether it will be a separate business in its own right
the objectives of the joint venture
the financial contributions you will each make
whether you will transfer any assets or employees to the joint venture
ownership of intellectual property created by the joint venture
management and control , e.g. respective responsibilities and processes to be followed
how liabilities, profits and losses are shared
how any disputes between the partners will be resolved
an exit strategy - see the page in this guide on ending a joint venture

You may also need other agreements, such as a confidentiality agreement to protect any commercial secrets you disclose.

It is essential to get independent expert advice before any final decisions are taken.

A clear agreement is an essential part of building a good relationship. Consider these ideas:

Get your relationship off to a good start. For example, you might include a project that you know will be a success so that the team working on the joint venture can start well, even if you could have completed it on your own.
Communication is a key part of building the relationship. It's usually a good idea to arrange regular, face-to-face meetings for all the key people involved in the joint venture.
Sharing information openly, particularly on financial matters, also helps avoid partners becoming suspicious of each other. The more trust there is, the better the chances that your relationship will work.
It's essential that everyone knows what you are trying to achieve and works towards the same goals. Establishing clear performance indicators lets you measure performance and can give you early warning of potential problems.
At the same time, you should aim for a flexible relationship . Regularly review how you could improve the way things work and whether you should change your objectives.
Even in the best relationship, you'll almost certainly have problems from time to time. Approach any disagreement positively, looking for "win-win" solutions rather than trying to score points off each other. Your original joint venture agreement should set out agreed dispute resolution procedures in case you are unable to resolve your differences yourselves.

For more information, see the page in this guide on how to create a joint venture agreement.

Your business, your partner's business and your markets all change over time. A joint venture may be able to adapt to the new circumstances, but sooner or later most partnering arrangements come to an end. If your joint venture was set up to handle a particular project, it will naturally come to an end when the project is finished.

Ending a joint venture is always easiest if you have addressed the key issues in advance. A contractual joint venture, such as a distribution agreement, can include termination conditions . For example, you might each be allowed to give three months' notice to end the agreement. Alternatively, if you have set up a joint venture company, one option can be for one partner to buy the other out. The original agreement may typically require one partner to buy out the other.

The original agreement should also set out what will happen when the joint venture comes to an end. For example:

how shared intellectual property will be unbundled
how confidential information will continue to be protected
who will be entitled to any future income arising from the joint venture's activities
who will be responsible for any continuing liabilities, e.g. debts and guarantees given to customers

Even with a well-planned agreement , there are still likely to be issues to resolve. For example, you might need to agree who will continue to deal with a particular customer. Good planning and a positive approach to negotiation will help you arrange a friendly separation. This improves the chances that you can continue to trust each other and work together afterwards. It can also raise your profile in the business community as a reliable and productive partner.

Our information is provided free of charge and is intended to be helpful to a large range of UK-based (gov.uk/business) and Québec-based (infoentrepreneurs.org) businesses. Because of its general nature the information cannot be taken as comprehensive and should never be used as a substitute for legal or professional advice. We cannot guarantee that the information applies to the individual circumstances of your business. Despite our best efforts it is possible that some information may be out of date.

The websites operators cannot take any responsibility for the consequences of errors or omissions.
You should always follow the links to more detailed information from the relevant government department or agency.
Any reliance you place on our information or linked to on other websites will be at your own risk. You should consider seeking the advice of independent advisors, and should always check your decisions against your normal business methods and best practice in your field of business.
The websites operators, their agents and employees, are not liable for any losses or damages arising from your use of our websites, other than in respect of death or personal injury caused by their negligence or in respect of fraud.

Need help? Our qualified agents can help you. Contact us!

Create my account

The address of this page is: https://www.infoentrepreneurs.org/en/guides/joint-ventures-and-partnering/

INFO ENTREPRENEURS

380 St-Antoine West Suite W204 (mezzanine level) Montréal, Québec, Canada H2Y 3X7

www.infoentrepreneurs.org

514-496-4636 | 888-576-4444 [email protected]

Consent to Cookies

This website uses necessary cookies to ensure its proper functioning and security. Other cookies and optional technologies make it possible to facilitate, improve or personalize your navigation on our website. If you click "Refuse", some portions of our website may not function properly. Learn more about our privacy policy.

Click on one of the two buttons to access the content you wish to view.

JOINT BUSINESS PLAN: Top 7 Secrets To Successful Joint Business Planning&

by Kenechukwu Muoghalu
August 14, 2023

Table of Contents Hide

What is joint business planning, what are the benefits of a joint business planning, what is a joint business plan , #1. have a plan, #2. choose the right joint venture partner , #3. communication, #4. define the where, what, and how, #5. monitor performance, #6. build trust, #1. how ready are you, #2. choose the right partner, #3. source business together, #4. ending a joint business planning, what if i lack the skills to create a joint business plan for myself, joint business plan faqs, what should be in a joint business plan, how do i set up a joint venture in the uk, how do you split profits in a joint business.

If you have plans to join a joint business, you have to understand the ethics of this venture before you proceed. You will need to set the right objectives for the business partnership. You will also need to have a joint business plan stipulated just for this course. There are a lot of processes, but not to worry. This article has exclusively explained what a joint business plan is and how it can help your investment, coupled with a sample template that can help make your journey easier. Let’s dig in!

Joint business planning is a collective effort between a vendor and a retailer. In this form of business, the two parties will be involved in the open sharing of information. However, it allows the joint parties to reach common ground and mutually agree on the business plan. I will give it a simpler definition, I need you to understand the basics of this Joint business planning.

A joint business plan can also be said to be an agreement between two or more businesses in order to pool their resources to achieve a goal. It’s just like two or more people running a business. A joint partnership can be initiated in any business. A sample of this can even be found in jointly owning a personal trainer business and turning it into a joint business.

They also share the risks and rewards of the investment. The joint companies also collectively own equal shares and put their heads together to make their investment successful. They work with trends, initiatives, and forecasted market environments.

People can choose to open a joint venture for multiple reasons. It can be due to a business expansion, a new product development, or moving into new markets, especially internationally. Or just practicing the adage that says “two heads are better than one”.

However, it can be difficult to build the right relationship that can boost the venture. But with the right resources, which includes having a joint business plan to serve as a guide, you would scale through. You should also know that Joint business planning with partners has proven to be one of the most effective ways to drive revenue and establish joint accountability.

Having talked about what a joint business venture is, now we will talk about having a plan that will serve as a guide through your investment. A joint business plan is a document that outlines a business coalition of two or more companies. This joint business plan is divided into several sections which state the companies involved, their purpose, and their responsibilities in the business.

In summary, you can say that the plan contains temporary activities that can help achieve specific goals. What a proper joint business plan requires is to incorporate each party and make sure they clearly understand themselves and their goals. After the plan is been created, it will need to pass through a legal review just to test its legitimacy.

Read Also: JOINT LOAN: Definition And All You Need To Know

Mind you, this joint business plan is above and beyond a standard business plan . It can also help you plan some measurable objectives, execution tactics, go-to-market, target account lists, and more. This business plan can serve you well, especially when it is for a joint business. Keeping track of all your business activities is a must because other people are involved in the investment. You can try checking your partner’s progress once in a while against the agreed plan.

Top 7 Secrets To a Successful Joint Business Planning

When it comes to joint business planning, there are secret tweaks that can help you scale through. You know Joint business comes with risks because of its joint partnership nature. Partnership most times can be diverse language, increased complexity, diverse cultures, and frequency of failure.

That is why we have formulated the top 7 secrets to having a successful partnership. Let’s take a quick rundown on them.

It always pays off to have a strategic plan on standby in your joint business. Your joint partnership should kick off with careful planning. To aim this, review your business strategy to see if a joint venture is even the best way to plan and achieve it. Consider the businesses involved, and compare their strengths and weaknesses to determine if it is a good match. Your strategic plan has to also answer why you want to partner with what you need to achieve from it. Is it for geographic expansion, new markets, or funding? Being clear will make the parties involved work towards achieving their objectives.

Before going ahead to choose a partner, it is wise to determine how well they perform. Find out their attitude to collaboration and their level of commitment. Find out if you share the same business objectives with them, are the people you could trust? Do they have a nice reputation? These questions are necessary to determine who you are going into business with. Do your due diligence checks and don’t spend time having lunches with them.

After your little investigation work on your partners, and hold a common ground with them if they fit. Communication can help build a relationship. Ensure that your partners understand what the basics of a Joint Business agreement really are. Are they clear on the goals, human resources, and financial contributions? This is the time to meet them, have those one-on-one meetings with them, communicate and make the best out of it. If you fail to plan like this, your joint business won’t be stable.

Create ways of working to energize and unite the partners involved. Map out the vision, strategic plans, and the scoreboard to make sure that everyone is following a common goal. Provide a common working pattern that includes decision-making, problem-solving, conflict management, collaboration, and technology. Find a way to deal with problems that occur, and look for win-win solutions instead of trying to score points off each other.

When your partners have reached common ground on what the goal is, then let the work begin. You and your partners should also establish a clear performance indicator that allows you to measure your performance towards the goal. You should also set targets so that you can keep track of any possible problems that might occur.

To be honest, this is the most crucial step in these secrets. You should understand that without trust, your Joint partnership will fail. There is no need to paint the truth to make it appear nice. Every team needs trust amongst themselves. Imagine having companies merging together, having diverse cultures, languages, and interests without trust. How do you think that ship will sail? When you have trust in someone, their differences turn into strengths. You will also tend to encourage creative challenges just to promote collaboration. This is an important factor that should not be ignored in your joint business planning.

This is another important variable that needs to exist in a Joint partnership because, without it, things will fail to happen. Invest in leadership, don’t focus on the senior leader, because even those leaders at the pointy ends will do just great. The reason for this action is that leaders tend to be the biggest opportunity to shift performance. You need to have a strong leadership team. And they must trust each other, connect, listen, and engage like no other.

Joint Business Plan Template Checklist

To summarise all that is been said in this article, we have also included a sample template checklist that can help you prepare for and plan a successful Joint business. To make use of this joint business plan sample template effectively, you have to make sure that you follow all the options listed below. They include:

This is a joint business plan template you need to check off your list. Determine how ready you are, is your business also ready for the change? You can determine this by researching on the activities of other businesses. You can also carry out a SWOT analysis of your business. Compare your working methods with that of your partners and also involve your employees, tell them about your new plan.

This is been mentioned again for those at the back. It is crucial to choose the right partner. When choosing you should consider their existing customers and suppliers, their behavioral patterns, and also the available finances of the partners.

Know the capabilities of your partners, and discover which has a specified responsibility. It can be sales activities, marketing, or new business generation. Each company should understand what they should work for and see that they achieve it.

Most times, we should consider all possible factors because of the fear of the unknown. Your agreement with your partners should make provisions for terminating the joint partnership. In your agreement, make sure to include an exit strategy , specified ownership of assets in the business, and distribution of any weaknesses resulting from the joint venture.

We got you, just right in time. We understand where it pains the most and we also understand why you would have so much difficulty creating a joint business plan for yourself even with the provision of a sample template. If this is you, then you need not worry.

Creating a business plan from scratch is no child’s play. It can even be harder while trying to use an existing plan to mold yours. You don’t have to if you don’t want to, because we have created a ready-made joint business plan just for your comfort.

This business plan does not require you to spend most of your day trying to figure out one section or the other. All you need to do is to apply directly to your joint business and watch it blossom. No long talks! Grab a copy of your joint business plan here !

It is certain that having Joint business planning can be difficult and challenging with tons of risks to take. But there is always a way around every hard obstacle. If you carry your Joint partnership and nurture it in the right way while following all the rules that apply, then you won’t have a problem.

These rules can be either creating a Joint Business plan or following some basic factors that can help maneuver your way through the investment or even using a sample template. When you follow the rules and secrets that guide them, then your investment won’t be the same. If it gets too hard, then contact us here.

To acquire a successful joint business plan, you need to ensure that both parties involved are capable of understanding each other’s goals. They should also understand the nature of their business and customer requirements. When they are on a mutual level, their foundation becomes strong.

To set up your joint business in the United Kingdom you will need to check the exact legal status of the new business. You can also begin due diligence on your joint partners. Know the financial commitment and how profits can be earned.

Before splitting the profits in a joint business, you must ensure that all business partners are in agreement about the profit-sharing. It can be split equally or on a different base according to the original agreement.

SETTING UP A PARTNERSHIP: How to Start a Business Partnership In simple Steps
JOINT MORTGAGE: Simple Guide To The Processes
JOINT LIFE INSURANCE: Guide to Life Insurance Plan

Kenechukwu Muoghalu

Kenny, an accomplished business writer with a decade of experience, excels in translating intricate industry insights into engaging articles. Her passion revolves around distilling the latest trends, offering actionable advice, and nurturing a comprehensive understanding of the business landscape. With a proven track record of delivering insightful content, Kenny is dedicated to empowering her readers with the knowledge needed to thrive in the dynamic and ever-evolving world of business.

Landlord Checklist For Renting a House: Guide For Tenants And Landlords

House hacking: strategies & all you need.

We noticed you're visiting from Netherlands. We've updated our prices to Euro for your shopping convenience. Use Pound sterling instead. Dismiss

Last Updated on August 15, 2023 by Kenechukwu Muoghalu

What Is a Joint Venture? How It Works & How To Set It Up

Ioana Andrei

Ioana holds a BSc in Business Management from King's College London and has worked for 4+ years as a management consultant in the industries of technology, media and telecoms. Ioana is also a successful entrepreneur, having launched several social enterprises. No stranger to IT and enthusiastic hackathoner, Ioana is also an accomplished fintech, SaaS and B2B tech writer.

Updated on January 30, 2024

Guides Business Operations

A joint venture is an agreement between two or more companies that pool resources, share profits, and work toward a common goal.

What Is a Joint Venture?

What are the benefits of a joint venture, how does a joint venture work setting up and running a jv, joint venture risks, bottom line on joint ventures.

A joint venture can be a win-win way of partnering with another company to achieve goals, such as entering new markets, since you get to split the risk and costs of the venture with other parties.

However, effectively running a joint venture relies on many factors, including finding suitable partners and successfully onboarding employees. You’ll need a deep understanding of how joint ventures are defined, the risks involved, and how to set them up correctly to avoid financial and reputational losses.

That’s why we’re here to help. In this guide, we explain what a joint venture is and how to create one. Let’s dive in!

Key Takeaways

The term “joint venture” refers to a goal-driven relationship between 2 or more organizations. When the goal is achieved, the venture usually ends or is integrated into one of the partners’ businesses.
Entering a joint venture can help lower costs and risks associated with achieving business goals, such as entering a new market, while combining resources and expertise with other parties.
Joint ventures also carry some risk. For example, you might be giving away your intellectual property (IP), the different workplace cultures might be incompatible, or slow decision-making could lead to missed opportunities.
To ensure joint venture success, perform due diligence on potential partners, write a comprehensive agreement and business plan, and design an effective onboarding strategy.

A joint venture (JV) is a business entity or project co-owned by two or more organizations targeting the same goal — e.g., to design an innovative product or penetrate an unserved market. The parties invest varying amounts of capital and share the venture’s profits.

The JV is usually a separate financial and legal entity from the businesses entering it. It’s also intended to have a limited lifespan , ending when the goal is achieved.

Typically, a company will enter a joint venture agreement when it lacks the expertise or resources to enter a new market or wants to lower the risk of launching new services.

Joint ventures have attractive benefits. Here are the top ones.

Lower risk and costs

Around 20% of businesses fail within 2 years of opening, but starting a venture with other businesses can lower your risk of failure thanks to increased knowledge and infrastructure.

In addition, investment and operational costs are often lower because you’ll share infrastructure and overheads with another business . For example, larger companies as partners could allow you to use property and equipment more cheaply or for free, saving you significant upfront costs.

Discover 13 effective ways to lower business costs in 2024.

More resources and expertise

By venturing solo, you must buy physical assets and build expertise through hiring or research and development—all of which are expensive, time-consuming tasks.

Conversely, a joint venture allows you to use combined resources and expertise to run operations more smoothly and create better customer outcomes.

Specifically, teaming up with another company can provide you with:

Specialized knowledge, skills, and abilities (KSA) .
Insight into a product, industry, or customer group.
Property, plant, and equipment (PP&E).
Relationships with suppliers, clients, or government agencies.

Easier new market entry—including foreign markets

Joint ventures can present an easier way of penetrating new markets, especially overseas ones. For instance, your co-venturer might have a recognizable brand, customer insights, or specialized products or supplies in a market, whereas you don’t. Also, some countries legally require you to create a joint venture with a local business when entering foreign markets.

Even when you’re not required to start one, a joint venture helps you enter new markets more easily. A partner in a foreign or specialized market can offer:

A thorough understanding of cultural factors, government relations, and customer needs.
Easier access to property, land, equipment, and supply and distribution chains.
The ability to hire local talent more easily.
Insight into local languages and dialects.

Let’s dive into the key aspects of setting up and running a joint venture.

Find a joint venture partner(s)

Choosing the right partner(s) is central to your JV’s success. Here’s how to go about it.

Decide your partner’s role in the venture

Be specific about what your ideal joint venture partner should contribute. Is it subject-matter expertise, marketplace relationships, capital, or something else? Having a requirements checklist will help you identify the right JV partner.

You may also find it useful to categorize the joint venture relationship as one or more of the following types:

Project-based: Working with a company with similar or different capabilities to complete a specific project (e.g., building a bridge).
Functional: Choosing a firm with different expertise for a short- or long-term venture (e.g., a phone manufacturer and a software company).
Vertical: Joining forces with a company in your supply chain to secure production or distribution channels (e.g., a food producer teaming up with a distributor).
Horizontal: Partnering with a company that creates similar products but in different markets or to different customer groups.

Research and shortlist partner candidates

Once you’ve clarified your JV partnership type and requirements, perform market research to identify a shortlist of suitable partner candidates. Start broad and narrow your list by applying additional criteria.

For example, speak to your industry contacts and research companies based on their location, size, product type(s), and/or target customer. Create a long list of potential JV partners. Your list might be between a few dozen to 100+ businesses.

Then, reach a shortlist by applying more specific criteria. You could, for example, prioritize companies whose products have certain features. Remove any companies from your list that don’t fit your criteria. Typically, a shortlist will include up to 20 candidates you can start contacting.

Select your joint venture partner(s)

Engage your shortlisted JV candidates by email or phone and simply state you’re exploring a joint venture opportunity. Try to establish direct communication with a senior representative, such as the company CEO or head of sales, and book a meeting with them to explain your plans and requirements.

During the meeting, be sure to:

Sign a non-disclosure agreement (NDA). Overlooking this step means sensitive information, such as strategic plans and product IP, could be leaked in the industry or the media—or your JV candidate may use it in their business. Protect your interests by co-signing a business confidentiality agreement .
Ask questions about capabilities, goals, and finances. You must understand their business in-depth to confirm they can provide what you’re looking for. For example, are their leaders as passionate about the venture as you are? Do they have the financial health to invest in this opportunity?
Understand their company culture. Culture clashes can ruin even the best JV plans. So, ensure your workplace cultures are compatible. You can, for example, visit your prospective partner’s offices and facilities and speak to employees and customers. Invite them to do the same at your workplace.
Determine investment expectations. Firstly, bring your own financial estimates to the meeting. How much are you willing to invest, and what profit share percentage do you want? Then, discover your potential co-venturer’s expectations and check that you’re in the same ballpark. For example, it likely won’t be a good match if you’re both looking for 80% ownership.
Perform due diligence. This helps ensure everything your prospective partner has told you about their company is true. Due diligence can involve reviewing your potential partner’s financial statements and equipment and assessing their employees’ skills. In complex cases, you can hire due diligence firms to do this for you.

Repeat these steps for additional companies if you plan to partner with more than 1.

A happy worker takes an onboarding quiz on the Connecteam app

Decide the joint venture’s legal status

Next, determine whether you’ll incorporate or not incorporate your joint venture.

You can enter a joint venture without creating a separate legal entity. These are commonly known as non-incorporated joint ventures . The JV partners sign an agreement outlining the joint venture terms, and they run the JV’s operations and finances as individual companies.

While easier and less expensive, this option could make your business liable for the JV’s financial, legal, and reputation risks, including lawsuits.

The other option is incorporating your JV , which may offer increased protection for the venture and its owners and workers. In addition, incorporation allows the venture to borrow money, own property, sue and be sued, and pool all parties’ costs and revenues in one place. These are all less likely to be possible under a non-incorporated entity.

In the US, common legal entities include:

Corporation (either C Corp or S Corp ): Owned by shareholders.
Limited liability company (LLC): Owned by 1 or multiple individuals who aren’t personally liable for business outcomes.
Partnership: Owned by 2 or more individuals who are personally liable for business outcomes.
Charity or non-profit: Privately owned, typically donation-funded and tax-exempt.

Finally, consider taxation when deciding your JV’s legal status. For instance, a separate for-profit legal entity will need to declare revenues and costs and pay taxes. However, with a non-incorporated joint venture, your company’s tax return might need to include your portion of the JV’s revenues and costs.

Research each incorporation option in-depth and consult a professional tax advisor before deciding your joint venture’s legal status.

Write an agreement

The best way to ensure your business interests are protected—and that all parties perform their duties—is by writing a joint venture agreement.

A basic joint venture agreement should include:

How ‌investments, assets, liabilities, profits, and losses are divided among the parties—e.g., 50/50, 40/60, etc.
Each party’s responsibility in the case of losses and bankruptcy.
Each party’s legal liability in various circumstances, such as a lawsuit.
Each party’s voting rights.
Whether the joint venture is being set up as a separate entity and, if so, the entity type.
A description of the joint venture aims, estimated duration, location, and day-to-day operations.
The persons or entities responsible for specific duties, such as managing government relations or attracting customers.
When and how parties can exit the joint venture—for example, upon reaching the stated goals, if the venture is liquidated, or when 1 participant buys out the other(s).

Get legal advice from a professional or firm that understands your business and is experienced in writing joint venture agreements. This helps ensure you don’t leave out vital clauses that protect your finances and reputation.

That said, not all joint ventures are backed by a formal agreement. A handshake agreement can also work for small business joint ventures or low-risk collaborations. An example of this kind of agreement would be an email thread where all JV parties agree on their share of investments and responsibilities.

Create a business plan

Your business plan is the blueprint that all JV parties consult when making decisions across operations, HR, marketing, and more. It can also help you get funding, such as investor capital. You and your collaborators must develop and agree on it together before kickstarting operations.

Here’s the basic structure of a business plan:

Executive summary: Create a short “elevator pitch” summarizing all subsequent sections. It’s best to write this last, even though it appears first in your plan.
Business model: Describe your mission, target market, and product or service. Highlight your venture’s unique selling point (USP)—why your venture is likely to be successful among competitors.
Operational model: Include your organizational structure, hiring plans, and how you’ll manage daily operations.
Market research: Describe the market you’re entering, including customer needs and competitor details. Use specialized frameworks—like SWOT analysis, which breaks down strengths, weaknesses, opportunities, and threats—to organize the information.
Marketing and sales plan: Outline the strategies and resources you’ll use to market and sell your products. For example, discuss physical and online marketing channels and customers the parties already have access to.
Financial plan: Estimate key figures such as revenues, costs, investor capital, and debt for the next 5 years. Explain how you calculated them—for instance, by including the prices and quantities of goods sold.

Connecteam has a free business plan template you can use to get started quickly.

Onboard employees successfully

Your joint venture’s team members can be a combination of workers from partner companies and newly hired employees. Some of your current employees may even work part-time for your business and part-time for the JV.

Either way, properly onboarding the JV team is essential to avoiding costly outcomes such as productivity losses, culture clashes, and high employee turnover.

First, the partner companies must agree on the venture’s mission, values, and measurable goals, which help define the onboarding process.

Then, the companies must onboard the venture’s standalone leadership team, including the JV’s CEO, COO, and CFO. Since these individuals are critical to the venture’s success, it’s ideal they don’t hold full-time executive responsibilities in the partner companies.

Onboarding for the JV leadership team should comprise:

Holding meetings to discuss the business plan components in depth—e.g. marketing, product strategy, customer insight, etc.
Offering the leadership team time to process new information, perform their own research, and develop plans relevant to their roles.
Organizing specialist training sessions as needed to fill executives’ skill gaps.
Asking the team to build on the mission, values, and goals to develop a people strategy. This should include strategies and actions that help hire, retain, engage, and train employees.

A composite image showcasing Connecteam's Onboarding feature through a Coffee & Menu Training course for restaurant staff.

Depending on the funds and goals of the JV, you might need additional employees to join the venture team. For instance, they may execute specialist responsibilities across research, product, or sales.

Onboarding for all JV employees should include:

Industry, product, and customer insights to explain the venture’s position in the market.
Role-specific training plus mentoring from an appropriate senior manager.
Socialization opportunities such as team lunches, informal outings (or calls), and onboarding buddy chats.
Employee management processes and systems, such as internal communication channels, payroll, time tracking and timesheets, labor contracts, and more.
Company policies and legal obligations, from health and safety rules to anti-discrimination policies.
Line management relationships and onboarding buddy schemes.

Get started with Connecteam for free today!

Bringing together 2 or more companies to start a venture isn’t always problem-free. It’s why JVs are typically fixed-term endeavors: Trying to meet multiple businesses’ priorities can become counter-productive in the long run.

Here are the main risks of joint ventures to be aware of.

Incompatibility between joint venture partners

Joint venture partners might be incompatible, leading to internal conflicts , turnover, and loss of trust among employees.

One key compatibility factor is the partners’ company cultures . For example, 2 companies sharing a drive for innovation and disruption would likely work well together—but a business with a slower, more bureaucratic culture could face issues in partnering with a company with a fast-paced, creative culture.

The companies’ individual processes and systems are another factor . For instance, one might be tech-savvy and efficiency-led, while its counterparty relies on pen and paper. Clashing operational styles don’t just lower productivity— they can also prompt arguments about unequal levels of effort and impact.

It’s difficult to solve compatibility issues once the venture is operating. So, do your due diligence thoroughly before choosing your collaborators.

Placing intellectual property at risk

You might need to share some of your IP—such as product expertise and customer data—to run the joint venture effectively. This can place you at a commercial disadvantage if your joint venture partners are potential competitors.

That said, you can lower this risk in 2 ways :

Share only the minimum amount of IP required for effective collaboration—or none at all, if you can.
Co-sign a non-disclosure agreement (NDA) and add clauses to your joint venture agreement that prohibit storing or disseminating collaborators’ IP.

Connecteam lets you store important team documents securely and choose who has access to each one. In addition, you can create and save training manuals, standard procedures, and much more. It’s all a few taps away on employees’ mobile devices.

Slow decision-making

Multiple management teams may take longer to reach decisions than just 1 team would—especially when tackling new products or markets. Each party might, for instance, fear making the wrong move and overthink decisions relating to products, sales, or operations.

Slow decision-making can lead to missed opportunities, lower productivity, bottlenecks, and even decreased revenue in the long run.

To avoid this, you could consider creating a separate leadership team for the joint venture , with the founding companies’ leaders acting as decision-makers.

You can lower your joint venture risks by keeping your intellectual property secure, creating a healthy company culture, and ensuring effective communication and day-to-day management.

Connecteam can help you with all this and more. Team members can stay connected on the go, celebrate their achievements, review and complete tasks, access essential documents, and more. Plus, you can monitor team performance with real-time employee task tracking and time reporting.

A image of a worker next to a mobile phone with the Connecteam app - chat interface

A joint venture (JV) allows you to join forces with 1 or more companies to work together toward a clear goal. Your joint venture partners share their expertise and resources (e.g., funding, product IP, stakeholder relationships, and more) to help achieve the objective. This enables you to grow as a business while lowering risk and costs.

Your JV can be a separate business entity with its own financial and legal responsibilities. Or, it can remain non-incorporated as an agreement between the independent partner companies. Either way, you and your partners must determine a clear responsibility and profit split, plus how and when you can exit the joint venture.

It’s also important to find partners who share your values and beliefs to avoid problems such as efficiency and turnover. Finally, you must design a thorough onboarding process so all staff members work toward the same goal.

What is an example of a joint venture?

An example of a successful joint venture is Google Earth. The program that offers 3D images of Earth based on satellite imagery started when Google formed a joint venture with NASA in 2005. This was a functional joint venture where Google’s software and data management capabilities worked together with NASA’s satellite infrastructure.

Is a joint venture good or bad?

A joint venture has both advantages and disadvantages. It can be a lower-cost, lower-risk option when you want to expand your business—for instance, by entering a new market—because you pool resources with another company. However, without finding appropriate partners that complement your capabilities and company culture, you risk financial losses, high turnover, and even reputational damage.

Is a joint venture always 50/50?

A joint venture doesn’t always involve a 50/50 split of investments and profits. The companies in the joint venture can negotiate a percentage split that works for their financial goals—e.g., 40/60, 30/70, etc.

Disclaimer: This article offers general guidance on setting up joint ventures and isn’t a substitute for legal or professional advice. Individual situations may vary, and we recommend consulting with appropriate advisors. Connecteam isn’t liable for any outcomes—including costs—resulting from the use of this information.

Want more great articles straight to your inbox? Subscribe Here ⤵

: Prepare a

partners should first jointly prepare and agree on a ─ even before signing the .

, , policies and methods so that the , expectations and preferences of the parties are highlighted and sorted out. The partners should particularly focus on areas where they depend on each other, such as creation, , market penetration and R&D.

▪ ▪

mechanisms to resolve disagreements between the JV partners, contingency plans, , and .

How to Create an Effective Joint Business Plan

For two businesses to form a joint venture, they need a plan that outlines the nature of the business coalition. A joint business plan defines the state of the companies involved, the purpose of the joint business and the partners’ responsibilities.

A joint business plan describes all the activities that these business ventures must carry out to achieve specific goals.

The relationship between the two parties and their goals must be clearly understood. After creating the business plan, it must go through a legal review to test its legitimacy. In your business planning, you work together in a collaborative relationship toward mutually agreed terms.

Business planning for joint ventures helps the parties leverage resources, reduce costs, combine expertise and/or enter foreign markets. A well-defined joint business plan is vital for any agreement and business strategy.

What is a joint business plan?

A joint business plan is a document that defines a merger between two or more companies. It describes the purpose and responsibilities of each partner in the incorporation. You may also see it as a collaborative process of planning where a supplier and retailer agree on both long- and short-term goals, including growth, finances and shared initiatives for profitability.

The purpose of a joint business plan is to design a win-win strategy for increasing consumer sales. This plan allows the partners to build a formidable relationship with retailers for mutual support and benefits. Having agreed upon goals, both parties share insights on a common vision for better support, customer growth, enhanced process and improved sales.

Business planning depends on interested parties sharing their plans with defined mutual growth opportunities. The partners can detail and share strategic planning, growth strategy, tactics and any area of competitive advantage.

The joint business plan is created once a partnership agreement is mutually beneficial and defined. Parties would draw up, approve and sign a formal contract before the execution of the plan. This is followed by a periodic review of joint scorecards based on necessary performance metrics to fine-tune strategies.

The joint business planning process comprises every possible logistic, including human resources planning and how to reach project milestones. Resource accountability is vital to building trust. Your best tool for transparent resource use and accountability is a resource planner .

If the employees of the venture will need to go to a different location, the venture will likely have difficulty planning their tasks and locations. TimeTrack Auto-Scheduling provides joint ventures with a transparent planning tool that reduces effort and enhances error-free shift planning.

TimeTrack Auto-Scheduling

Types of joint business plans

Standard plan.

This is often referred to as the working plan. It offers an overview of the company, outlines its goals, and details when and how entrepreneurs wish to achieve the goals. Such a plan helps secure funds, investments or loans. Within the plan, you could specify how you will use investor funds and their potential profits.

What-if plan

Sometimes things don’t go as planned in business. The what-if business plan defines the various roadblocks that a company might face as it strives to achieve its business objectives. The venture is largely at the whims of external factors, including the supply chain and stock market. You need to outline a predictable scenario to let business partners know how to recover their funds.

One-page plan

While a detailed plan is vital, there are instances where you will need to provide an abridged version of your plan. This one-page business plan outlines the summary of demand, solution, model, management team and action plan.

Start-up plan

A business plan for entrepreneurs, especially those in the early stages of their business planning, will need a start-up business plan. It is designed to give potential investors the bigger picture and outline how you want to achieve your goals. It often includes an executive summary, background, product and service descriptions, market analysis, costs and financial projections.

Expansion plan

This is a business plan that’s necessary when you need to scale your business and identify the necessary resources for its development. These could be financial investment, an additional workforce, new products or raw materials. This plan will detail the business background, needed resources and how they will contribute to growth and business expansion.

Operational plan

An operational business plan revolves around near-term goals , especially those you will work towards achieving within a year. It defines the activities your venture will focus on and emphasizes the role of the workforce and budgeting in achieving the operational goals. In most situations, the heads of departments are key participants in the operational plans because of the need for approval in achieving the goals.

Strategic business plan

This is different from the others because it focuses on how departments can work together. This venture plan is more comprehensive and requires senior-level approval before implementing goals. This plan answers the questions of how to achieve goals, what resources are needed and the execution plans for achieving the goals.

joint-business-plans-timetrack-blog-tips

Joint business planning tips

Companies that benefit from a joint business plan

A joint venture exists mainly as a contract between new cooperating partners. In forming a joint venture, each of the business partners agrees to the assets they will bring to the table and how income and expenses will be shared.

While a joint venture is a corporation between two or more entities, each of the companies, be it an individual, company, corporation or group of individuals, still has its original legal status, though not all joint ventures result in a new business entity. These companies could be sole proprietorships or partnerships, limited partnerships, corporations, limited liability companies or non-profit organizations.

Examples of a joint business plan

Perhaps you have an online venture selling high-quality products at reasonable prices, while needing to increase brand strength. Such an example of a joint business plan outlines a company overview, executive summary, product and service offerings, marketing strategy, market analysis, budget and financial planning.

A joint business plan may be designed for ventures rendering menu services such as lattes, espresso, coffee, cappuccinos, and sandwiches. The business plan outlines an executive summary and studies your competition , target market, marketing plan, ownership structure and operational plan.

A joint venture could be designed around offering services such as shipping, faxing, postal and copying to residents to conduct research , create debate space and generate ideas. This example of a business plan will include an executive summary, a vision and mission statement, goals, objectives, and measures, organizational structure, marketing analysis and a financial plan.

Top strategies for effective joint business plan

In a joint business venture, there are risks which include rising complexity, cultural diversity, high failure rates and language diversity. The strategies detailed below will benefit the venture in navigating the challenges through effective joint business planning.

Strategic plan

Strategic global planning is an effective business practice for entering a new market. It helps to identify opportunities and threats. Before beginning strategic planning, be sure that a joint venture is the right action for you. Compare the strengths and weaknesses of the partners to confirm a good match. Your strategic plan should explain why you want to collaborate with that partner and what you hope to achieve, how to monitor trends and collect good data. Some of the reasons you may wish for a new joint partner may be to enter a new market, geographic expansion, financing, etc.

The right partner

The choice of partner is crucial, but what is more important is understanding the effectiveness of partners in delivering on their promises. Do your due diligence on your partner’s attitude toward collaboration, performance and level of commitment. What about sharing the same objectives?

Effective communication for a great relationship

After your investigation, if you deem the partner fit, find mutual ground. Communication is the key to a good relationship. Make sure your partner understands the foundation of the joint venture and agreement. Ensure they agree on human resources, financial contributions and goals. To consolidate the stability of your venture, be upfront, honest and transparent about your objectives.

Clarify how, what, and where

Be clear on the vision, strategic plans and scoreboard to ensure that everyone is energized and united about the goal. Define a common working pattern. This has to include conflict management, decision-making, collaboration, problem-solving and technology strategies. Focus on win-win solutions.

Track performance

Is everyone putting in the hours and making productive headway? One way to gauge this information is by time tracking. One of the challenges for companies whose employees work in shifts and in different locations is tracking attendance. TimeTrack Attendance Tracking helps companies monitor employees’ work hours and leave days, so that managers can stay up to date on potential delays.

TimeTrack Attendance Tracking

Once you have set out the goals and vision for the new venture, establish key performance indicators, the data you want to track and the process to measure those performance metrics. This involves creating a joint scorecard for each metric against trends and competition. The targets you set must guard against possible problems the partners might encounter.

Build trust

Your best joint business strategy is to build trust and create value, without which your partnership is bound to fail. Trust is the foundation of every partnership. It is an important factor in business planning. Without it, neither partner can succeed. How do you manage diverse cultures, interests and languages if the partners lack trust? Trust builds team strength and encourages creativity while promoting collaboration.

Good leadership

The cost of poor leadership is so high that you must not venture into joint partnership without assurance of good leadership. Focus on building good leadership and not just creating “bosses”. Leadership presents the biggest opportunities to change the performance narrative. Create a strong leadership team, from whom all employees can learn.

A joint business venture is not without its challenges. To ensure a successful collaboration, focus on a clear strategy, excellent communication, transparency and strong leadership.

I am a researcher, writer, and self-published author. Over the last 9 years, I have dedicated my time to delivering unique content to startups and non-governmental organizations and have covered several topics, including wellness, technology, and entrepreneurship. I am now passionate about how time efficiency affects productivity, business performance, and profitability.

Search Search Please fill out this field.

What Is a Joint Venture (JV)?

Understanding Joint Ventures

How to Set Up a Joint Venture

Pros and Cons
Paying Taxes
Partnerships and Consortiums

The Bottom Line

Types of Corporations

Joint Venture (JV): What Is It, and Why Do Companies Form One?

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

A joint venture (JV) is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity.

Each of the participants in a joint venture is responsible for profits , losses, and costs associated with it. However, the venture is its own entity, separate from the participants’ other business interests.

Key Takeaways

In a joint venture (JV), two or more businesses decide to combine their resources in order to fulfill an enumerated goal.
They are a partnership in the colloquial sense of the word but can take on any legal structure.
A common use of JVs is to partner up with a local business to enter a foreign market.

Sydney Burns / Investopedia

Understanding a Joint Venture (JV)

Although a joint venture is a partnership in the colloquial sense of the word, it can be formed using any legal structure—corporations, partnerships, limited liability companies (LLCs) , and other business entities can all be employed.

Despite the fact that the purpose of a JV is typically for production or research, one can also be formed for a continuing purpose. JVs can combine large and small companies to take on one or several projects and deals.

Here are the four main reasons why companies form JVs.

1. To Leverage Resources

A joint venture can take advantage of the combined resources of both companies to achieve the goal of the venture. One company might have a well-established manufacturing process, while the other company might have superior distribution channels.

2. To Reduce Costs

By using economies of scale , both companies in the joint venture can leverage their production at a lower per-unit cost than they would separately. This is particularly appropriate with technological advances that are costly to implement. Other cost savings as a result of a JV can include sharing advertising, business supply, or labor costs .

3. To Combine Expertise

Two companies or parties forming a joint venture might each have different backgrounds, skill sets, or expertise. When these are combined through a JV, each company can benefit from the other’s talent.

4. To Enter Foreign Markets

Another common use of joint ventures is to partner with a local business to enter a foreign market. A company that wants to expand its distribution network to new countries can enter into a JV agreement to supply products to a local business, thus benefiting from an already-existing distribution network.

Some countries have restrictions on foreigners entering their market, making a JV with a local entity almost the only way to do business in the country.

Image by Sabrina Jiang © Investopedia 2020

Regardless of the joint venture structure, the most important document will be the agreement that sets out all of the rights and obligations of each party to the venture.

The objectives, the initial contributions of the parties, the day-to-day operations, the right to the profits, and the responsibility for losses are all set out in the JV agreement. It is important to draft it with care to avoid risking litigation down the road.

Advantages and Disadvantages of a Joint Venture

A joint venture gives each party the opportunity to exploit a new business opportunity without bearing all of the cost and risk. Joint ventures, by nature, are riskier than “business as usual,” and coopetition and sharing the risk is a wise move.

If the right participants are involved, the joint venture also starts out with a broader base of knowledge and pool of talent than any one party possesses on its own.

For example, a joint entertainment venture set up by an animation studio and a streaming content provider can get off the ground quicker—and probably with a better chance of success—than either participant could alone.

Disadvantages

Embarking on a joint venture requires relinquishing a degree of control. The vital decisions are being made by two or more parties.

The companies involved must go into the project with the same goals and an equal degree of commitment.

Extreme differences between the participants’ company cultures and management styles can be a barrier to success. Will the executives of an animation studio be able to communicate in the same language as the executives of a digital streaming giant? They might, or they might line up in opposing camps.

Setting up a joint venture multiplies the number of management teams involved. If one party undergoes a significant change in its business structure or executive team, the joint venture can get lost in the shuffle.

Paying Taxes on a Joint Venture

When forming a joint venture, the most common thing the two parties can do is to set up a new entity. As the JV itself isn’t recognized by the Internal Revenue Service (IRS), the business form between the two parties helps determine how taxes are paid.

As the JV is a separate entity, it will pay taxes as any other business or corporation does. However, if it chooses to operate as an LLC, its profits and losses would pass through to the owners’ personal tax returns, as with any other LLC.

The JV agreement will spell out how profits or losses are taxed. If the agreement is merely a contractual relationship between the two parties, then it will determine how the tax is divided between them.

Joint Ventures vs. Partnerships and Consortiums

A joint venture is not a partnership. That term is reserved for a single business entity that is formed by two or more people. JVs join two or more different entities into a new one, which may or may not be a partnership.

The term “ consortium ” is sometimes used to describe a JV, and there are similarities. However, a consortium is a more informal agreement than a JV. For example, a consortium of travel agencies can negotiate and give members special rates on hotels and airfares, but it does not create a whole new entity.

The agencies still pursue their own businesses independently. In a JV, they would share ownership of the created entity, jointly responsible for its risks, profits, losses, and governance.

Example of a Joint Venture

In 2022, two large Japanese companies, Sony and Honda, announced a joint venture to create an electric vehicle. Sony is one of the world's most prominent electronics companies and Honda is one of the most prominent automobile companies.

The established joint venture seeks to bring an electric vehicle to market by 2026 by combining Honda's skills in mobility development, technology, and sales, with that of Sony's expertise in imaging, telecommunication, networks, and entertainment.

The joint venture is called "Afeela." The company will be taking pre-orders in 2025 with expected delivery in the U.S. in 2026.

Why Would a Firm Enter Into a Joint Venture?

There are many reasons to join forces with another company on a temporary basis, including for purposes of expansion, development of new products, and entering new markets (particularly overseas).

Joint ventures are a common method of combining the business prowess, industry expertise, and personnel of two otherwise unrelated companies. This type of partnership allows each participating company an opportunity to scale its resources to complete a specific project or goal while reducing total cost and spreading out the risks and liabilities inherent to the task.

What Are the Primary Advantages of Forming a Joint Venture?

A joint venture affords each party access to the resources of the other participant(s) without having to spend excessive amounts of capital. Each company is able to maintain its own identity and can easily return to normal business operations once the JV is complete. JVs also provide the benefit of shared risk.

What Are Some Disadvantages of Forming a Joint Venture?

Joint venture contracts commonly limit the outside activities of participant companies while the project is in progress. Each company involved in a JV may be required to sign exclusivity agreements or a non-compete agreement that affects current relationships with vendors or other business contacts.

The contract under which a JV is created may also expose each company to liability inherent to a partnership unless a separate business entity is established for the JV. Furthermore, while companies participating in a JV share control, work activities and use of resources are not always divided equally.

Does a Joint Venture Need an Exit Strategy?

A joint venture is intended to meet a particular project with specific goals, so it ends when the project is complete. An exit strategy is important, as it provides a clear path on how to dissolve the joint business, avoiding drawn-out discussions, costly legal battles, unfair practices, negative impacts on customers, and controlling for any possible financial loss.

In most JVs, an exit strategy can come in three different forms: sale of the new business, a spinoff of operations, or employee ownership. Each exit strategy offers different advantages to partners in the JV, as well as the potential for conflict.

A joint venture between companies can open the way for expansion into a new line of business by each participant at a relatively modest cost. In fact, it sounds ideal: Each company contributes its own expertise, but the cost of the venture is split among them.

It’s only ideal, though, if the companies have a shared vision and an equal commitment to the success of the joint venture.

Internal Revenue Service. “ Tax Information for Partnerships .”

AP. " Japan's Honda, Sony Joining Forces on New Electric Vehicle ."

Car & Driver. " Afeela Is a New EV From Sony and Honda Coming to the U.S. in 2026 ."

Afeela. " Home ."

Terms of Service
Editorial Policy
Privacy Policy

Put your business on the road to success with a joint venture agreement

A successful joint business venture starts with a solid joint venture agreement. Find out how to create and amend this kind of agreement.

Find out more about business management

by Brette Sember, J.D.

Brette is a former attorney and has been a writer and editor for more than 25 years. She is the author of more than 4...

What is a joint venture?

Pros and cons of joint ventures, using a joint venture agreement, amending a joint venture agreement.

A joint venture is a great way for your business to reach more customers and achieve greater success. By working with another business and creating a joint venture, you'll have new opportunities for profit. When you enter into a joint venture, you'll want to use a joint venture agreement, so that the terms of your cooperative arrangement are spelled out and completely clear.

A joint venture is a project that two businesses agree to work on together. The old saying that two heads are better than one is at the root of a joint business venture. When your business cooperates with another business, you'll have twice the amount of resources and twice the reach than if you went it alone. Usually, a joint venture is created to work specifically on one type of research or one product that is of interest to both businesses.

A joint venture is different from a partnership. A partnership is a legal entity that's formed when two individuals form a business together. A joint business venture is two businesses who choose to cooperate on a specific project. They could decide to form a corporation or an LLC together for the venture if they want, but it is not necessary.

Examples of joint ventures include Toyota and BMW working together to do research on hydrogen fuel cells, or Alphabet (Google's parent company) working with GlaxoSmithKline to create bioelectric medicine. However, joint ventures aren't just for international corporations: A day care could work with a toy store to cosponsor a community event for families. A real estate agency could work with a law firm to create a guide on how to buy your first home.

A joint venture also could be as simple as one company's recommending another's product, with an incentive for any resulting sales (for example, Tim's Tennis Rackets, LLC including a flyer about Bouncy Tennis Balls, LLC in their tennis racket packaging).

Joint ventures have many advantages, but there also are some disadvantages. It's a good idea to think these through before entering into a joint venture.

Pros include:

Adding diversity to your products or services
Growth for your company
Working with someone else, which gives you access to expertise and ideas you may not have
Shared cost and risk, reducing your burden
The temporary nature of the venture, so, if it doesn't work, there is an end date

Cons include:

Work and costs that might not be equally shared, creating a drain on your business
A misfit in management style and culture, making it hard to cooperate
Failures of communication between your company and the one you're working with
Differing objectives
Restrictions on your ability to pursue competing projects

When you set up a joint venture, it's a good idea to put your plan in writing. The agreement outlines the complete terms of your plan to work together. This detailed contract discusses:

The term of the agreement
The duties of each member
The name and purpose of the venture
A description of the project
How the venture will be managed
Capital contributions and how capital will be managed
Indemnification
Duty of loyalty
Dissolution procedures
Signatures from representatives of each company

As you work together, it may become necessary to make some changes to the agreement . A written amendment to the joint venture agreement is the best way to do this. You'll want to outline the terms of the amendment together first, and then have it written up and reviewed. The amendment should be clear and refer exactly to the section it is amending. It is best to strike a section and provide a complete rewrite of it, rather than trying to explain words that should be added to or omitted from it.

If you are making big changes to your agreement, it is a good idea simply to create a new agreement with all of the new terms. It will be easier to refer to and follow, rather than having to flip between the original agreement and pages of amendments to determine what the new terms actually are.

An amendment should include the following:

An introduction that makes clear the date and title of the agreement it is amending and the names of the parties to the original agreement
An affirmation that the rest of the agreement will remain in place
A clearly written statement of the section that is being amended and the changes that are being incorporated
A statement that if there is an inconsistency between the original agreement and the amendment, then the amendment will be binding
A requirement that, if any changes are to be made to the amendment, such changes must be made in writing
A severability section that will continue to uphold the remainder of the amendment if any parts are held to be unenforceable

A joint venture can be an exciting way to pursue new avenues and opportunities for your business. Using a joint venture agreement will help keep your working relationship clear and on track.

Ritza Suazo

10 joint-venture examples you should know about.

We’ve listed 10 inspiring, real-world joint-venture examples that showcase how you can leverage the strategy to grow your business to unprecedented heights.

Companies of all sizes, from startups to established multinationals, are increasingly turning to joint-ventures as a way to drive growth, diversify their portfolio, and gain a competitive edge, in a fast-moving market. And it’s easy to see why.

These partnerships have proven to be an effective strategy for companies looking to enter new markets, develop innovative offerings, test new business models, create new revenue streams and more. Companies that enter into a joint-venture can:

Share risks and liabilities in large projects
Lower costs by creating economies of scale
Boost brand image with reputable partners
Acquire new skills and capabilities from partner companies

In addition, when executed skillfully, and with the right partner(s), joint-ventures have the potential to deliver results fast compared to starting on venture on your own from scratch.

To give you a better idea of how this strategy can be leveraged to boost growth, we’ve compiled a list of 10 inspiring real-world examples.

But first, let's kick things off with some context.

Find out how to build an innovation-led corporate ecosystem.

1. polaris and zero motorcycles.

Type : Horizontal joint-venture

In late 2020, Polaris, a leading manufacturer of all-terrain vehicles, joined forces with Zero Motorcycles, an established electric bike developer. The goal? To integrate Zero's advanced electric powertrain technology into Polaris' off-road vehicles and snowmobiles.

Polaris showcased the first tangible results of the venture in December 2021 – the Ranger XP Kinetic (the electric version of their Ranger utility terrain vehicle).

Although Polaris already had an electric Ranger in its lineup, it relied on a lead-acid battery. In contrast, the Ranger XP Kinetic boasts a state-of-the-art lithium-ion battery derived from Zero's cutting-edge EV technology.

The announcement generated significant buzz, resulting in hundreds of millions of media impressions and a surge in site traffic. Preorders for the Ranger XP Kinetic sold out within just two hours of going live.

What made this joint-venture successful?

Complementary expertise: Each company brought unique strengths. Polaris' vast experience in off-road vehicle design and engineering complemented Zero Motorcycles' innovative electric power technology - resulting in a superior offering.
Market demand: This joint-venture allowed Polaris and Zero Motorcycles to capitalise on the growing market demand for sustainable options in the electric off-road vehicle space.
Technological advancements: The partnership enabled the companies to leverage each other's resources to push the boundaries in electric off-road vehicle design and performance.
Effective marketing: The launch of the Ranger XP Kinetic generated significant buzz, increasing visibility for both brands.
Shared vision: Both companies shared a common vision for a more sustainable future, focusing on the electrification of off-road vehicles, ensuring a strong foundation for the venture.

2. Deutsche Telekom, Orange, Telefónica, and Vodafone

Earlier this year, four major European telecommunications companies, Deutsche Telekom, Orange, Telefónica, and Vodafone, announced a joint-venture to develop a new “privacy-by-design” ad tech platform . The platform, which started off as a Vodaphone project, works by enabling consumers to opt-in or deny communications from brands via publishers with one single click.

The only data shared in the process is a pseudo-anonymous digital token that cannot be reverse-engineered, providing consumers with more control, transparency and protection of their data, which is currently collected, distributed and stored at scale by major, non-European players.

Each company will hold an equal 25% stake in the newly-formed joint-venture, which will be based in Belgium and managed by an independent team under the supervision of a shareholder-appointed supervisory board.

Synergy: By combining their resources, these companies were able to create a competitive edge that enabled them to challenge established ad tech industry players.
Innovation: By pooling their resources, these companies were able to provide a cutting-edge solution with better-targeted ads and an improved user experience.
Data privacy and security: As concerns about data privacy and security escalate, the joint-venture's dedication to creating a transparent and secure platform is a significant advantage, helping to gain the trust of both consumers and advertisers.
Expanding reach: By collaborating, Deutsche Telekom, Orange, Telefónica, and Vodafone can broaden their reach in the European market, providing a wider audience for advertisers.

3. Spotify and Hulu

In 2018, music streaming giant Spotify and streaming platform Hulu joined forces to offer a combined subscription bundle, “ Spotify Premium, now with Hulu ”, providing users access to both services at a discounted price. The collaboration allowed both companies to expand their user base, enhance customer loyalty, and gain a competitive advantage over rival streaming platforms (e.g. Apple, which offers Apple Music and Apple TV+).

Despite operating in the same industry—streaming services—these companies collaborated to achieve common goals, successfully expanding their user base and achieving growth they couldn’t have reached on their own.

Expanded user base: The joint subscription bundle made it easier for users to access both platforms, attracting new customers and retaining existing ones.
Increased customer loyalty: By offering a discounted price for both services, Spotify and Hulu incentivised users to remain subscribed, enhancing customer loyalty.
Competitive edge: The partnership resulted in a unique value proposition; different from other platforms, providing an edge in the highly competitive streaming market.
Cross-promotion opportunities: The collaboration allowed Spotify and Hulu to cross-promote their content and services, increasing visibility for both brands.

4. Honda and LG Energy Solution

Type : Vertical joint-venture

In 2022, Honda and LG announced a joint-venture aimed at leveraging LG’s expertise to boost the production of lithium-ion EV batteries for Honda's electric vehicles. Plans include the construction of a state-of-the-art battery plant in Colombus, Ohio, by the end of 2024 and commencing mass production by the end of 2025.

The companies jointly agreed to set up their battery manufacturing facility in the U.S., stemming from their mutual understanding that increasing local electric vehicle production and securing a timely battery supply would optimally position them to tap into the fast-expanding North American EV market. The venture will not only help meet the increasing demand for electric vehicles but also bring significant economic benefits to the region (e.g. 3,000 new jobs in Ohio).

The collaboration illustrates how vertical joint-ventures can enhance supply chain capabilities, foster innovation, and help meet demand in new markets.

Combined expertise: This partnership allows Honda to build on its expertise in vehicle manufacturing while benefiting from LG's expertise in lithium-ion battery technology.
Strengthening the supply chain: By pooling resources from both companies, the joint-venture has been able to strengthen the overall supply chain.
Fostering innovation: The collaboration has resulted in a cross-pollination of expertise that will feed the growing demand for EV vehicles and create profits for both companies.

5. Adidas and Allbirds

Type : Project-based joint-venture

In May 2021, Adidas and Allbirds announced a joint-venture to create a sustainable and eco-friendly concept shoe called “Futurecraft.Footprint”. The new venture combined the sustainability advancements of both companies to make a shoe that required 2.94 kg of CO2 emissions, compared to Allbirds' flagship Wool Runners' carbon footprint of 9.9 kg of CO2 emissions. The shoe's midsole is based on Adidas' Lightstrike technology but is crafted using Allbirds' bio-based sugarcane material.

Unlike many concept projects, the Futurecraft.Footprint transitioned from an idea to a commercially available product by mid-December of that year. Priced at $120, the all-white sneakers quickly sold out, with only some outlier sizes remaining.

Expertise pooling: The venture brought together Adidas and Allbirds' expertise in athletic footwear and commitment to sustainability to develop a superior product.
Shared values: Both companies shared a common goal of promoting sustainability and reducing their carbon footprint, making the collaboration more focused and effective.
Market differentiation: The companies differentiated themselves in the crowded athletic footwear market by offering unique products that cater to environmentally conscious consumers.
Positive brand association: Adidas and Allbirds benefited from the positive association of their respective brands, enhancing their reputation for environmental responsibility.

6. Geely and Volvo

Type : Functional-based joint-venture

LYNK & CO is an automotive joint-venture between Geely Auto Group and Volvo Car Group, aimed at challenging the established automotive industry by catering to the needs of a new generation of connected consumers. With LYNK & CO, customers can choose to borrow, buy or subscribe for access to a car with added services that include insurance, maintenance and more. The process of choosing a car is simple, with two options of hybrid motor available as well as a myriad of fun high-tech details customers can add.

Since its inception, LYNK & CO has delivered over 600,000 vehicles to users, setting new records for growth among global automotive brands. In Europe, the brand continues to expand with seven permanent Lynk & Co Clubs in the Netherlands, Sweden, Belgium, and Germany, as well as numerous pop-up experience centres. There are also plans to expand to the US in 2024.

Combined expertise: The joint-venture blends Geely's understanding of the Chinese market and cost-effective manufacturing capabilities with Volvo's proficiency in safety, quality, and design.
Unique sales and ownership models: The brand's offering includes sharing possibilities, personalised services, and an open API, setting it apart from traditional automakers.
Global scale potential: LYNK & CO's expansion in Europe and plans to enter the US and Asia-Pacific markets demonstrate its potential for growth and global appeal.
Sustainability: The brand's commitment to offering an electrified lineup aligns with the worldwide shift towards sustainable mobility.

7. Sony and Honda

Type: Functional-based joint-venture

Sony and Honda announced a new electric vehicle (EV) joint-venture, Sony Honda Mobility,

earlier this year at the CES 2023 . The collaboration aims to create innovative and advanced EVs by combining Sony's expertise in AI, entertainment, and VR technology with Honda's automotive manufacturing capabilities and experience. Their first prototype, the "afeela," is designed to deliver an unparalleled in-car experience with a focus on entertainment, connectivity, and comfort.

With over 40 sensors, including cameras, radar, ultrasonic, and lidar, integrated throughout the vehicle's exterior, Afeela's ability to detect objects and drive autonomously will be significantly enhanced. As explained by Sony Honda Mobility CEO Yasuhide Mizuno: “Afeela represents our concept of an interactive relationship where people feel the sensation of interactive mobility and where mobility can detect and understand people and society by utilising sensing and AI technologies”.

Preorders are expected to open in 2025, and the EV will be sold first in the US in 2026, with plans for expansion to Japan and Europe at a later date.

Complementary expertise: Sony's proficiency in AI, entertainment, and technology, coupled with Honda's extensive experience in automotive manufacturing, resulted in a superior product.
Innovation: The "afeela," features a large panoramic display, an advanced sound system, and an array of innovative capabilities, pioneering future EV offerings.
Enhanced experience: The focus on entertainment, connectivity, and comfort sets it apart from competitors and provides a unique experience that appeals to modern consumers.
Market demand: The new venture is well-positioned to capitalise on the growing global demand for electric vehicles and the shift towards sustainable transportation.
Strong brand reputation: Both Sony and Honda are well-established and respected brands in their respective industries, which lends credibility to their joint-venture.

8. H&M Group and Remondis

In a bid to close the textile loop and promote circularity in the fashion industry, H&M Group partnered with Remondis, a leading waste management and recycling company, to form a joint-venture called Looper Textile Co . The company aims to gather, sort, and sell pre-owned and discarded garments and textiles, maximising their utilisation, reducing waste and minimising their environmental impact.

Owned 50% by H&M Group and 50% by REMONDIS, part of Looper’s goal is to become a provider for companies in the textile resale and recycling sector. Operations are set to start in Europe with plans to save approximately 40 million garments during the course of 2023.

Shared sustainability goals: Both companies are committed to promoting circularity. Their shared goals provide a solid foundation for a successful partnership.
Consumer awareness: The collaboration offers a timely and innovative solution that addresses environmental concerns and provides a guilt-free shopping experience for customers.

9. DBS, JPMorgan and Temasek

In 2021, JPMorgan Chase, Singapore-based DBS Bank, and Temasek, a Singaporean sovereign wealth fund, announced a joint-venture to create a new blockchain-based platform for cross-border payments, trade, and foreign exchange settlement. The platform, named " Partior ," aims to use blockchain and Distributed Ledger Technology (DLT) to reduce transaction times, lower costs, and improve transparency in cross-border payments.

Since its inception, Standard Chartered joined as a backer, and Partior has made strides on its mission to develop a blockchain-based interbank payment network, having engaged with 60 banks across 15 jurisdictions. There are also plans to expand beyond its initially supported currencies (i.e. USD and SGD) to include GBP, EUR, AUD, JPY, CNH and HKD. As explained by CEO Jason Thompson: “Our vision has always been to transform global payments and become the worldwide ledger for Financial Institutions’ value exchange.”

Technological innovation: The platform leverages blockchain to address inefficiencies in traditional cross-border payment systems, setting new standards for speed and transparency.
Collaboration across industries: The joint-venture involves key stakeholders from the banking, investment, and technology sectors, fostering a collaborative approach that benefits from diverse perspectives and resources.

10. L'Oréal, Hotel Shilla, and Anchor Equity Partners

In 2022, L'Oréal, partnered with Hotel Shilla, a high-end Korean hotel chain, and Anchor Equity Partners, a private equity firm specialising in the Korean and North Asia markets, to launch a new luxury cosmetics brand called "Shihyo."

Shihyo, which means "the wisdom of time" in Korean, focuses on products tailored to North Asian consumers, with a product line that includes facial cleansers, creams, shampoos, and conditioners. The products feature 24 ingredients produced by local farmers and are inspired by the 24 solar subdivisions of the traditional far-eastern calendar. The formulations also feature a patented ingredient called ShiHyo24, a nutrient-rich concentrate infused with fermented rice water and ginseng water.

The first Shihyo store, called Seoul Garden, will open in the coming months inside the Shilla Seoul Hotel in South Korea's capital, Seoul. The brand plans to expand into other countries in the region after its initial launch.

Combined expertise: The joint-venture leverages the strengths of each partner, combining L'Oréal's beauty expertise, Hotel Shilla’s luxury retail channels, and Anchor’s robust financial business model.
Local appeal: By incorporating locally sourced ingredients and cultural elements, Shihyo appeals to the unique preferences and needs of North Asian consumers, making it a strong contender in the region's luxury cosmetics market.
Clean, quality ingredients: High-quality, locally sourced ingredients are highly coveted in the luxury skincare sector, particularly among millennials and Gen Z.

Final thoughts

These joint-venture examples demonstrate the power of strategic partnerships in driving innovation, expanding market reach, and achieving business goals. By pooling resources and expertise, companies can unlock new opportunities and overcome challenges, creating a win-win situation for all parties involved.

As the business landscape becomes more global and competitive, joint-ventures will likely continue to play a critical role in fostering collaboration and success across industries.

________________

Are you looking to reach new markets, boost growth and create new revenue through strategic joint-venture initiatives? We can help you find the right partners to bring new ventures to life, increasing your chances of long-term success.

How to build an innovation-led corporate ecosystem

Grow your corporation from an egosystem to an ecosystem.

Get access to the only corporate venture database in the world

Looking for insights and inspiration for your next venture track? See who's changing the game and explore this ever-expanding database.

Keep reading.

How to create a marketing strategy for a corporate scaleup

Corporate ventures need to adapt their marketing strategy as they scale. Learn how to do it in this article.

BASF’s Chemovator: Turning bold ideas into thriving ventures

How Chemovator is helping BASF create a culture of innovation, engage employees and turn promising ideas into new revenue streams.

10 ways corporations can make money in the metaverse

Want to get in on the metaverse action? Here's how you can leverage it to create new revenue streams.

Joint Venture (JV): Definition, Why Companies Consider JVs?

DealRoom works with hundreds of firms and corporates managing joint ventures and helps them maximize value through our industry-expert developed JV software that helps firms anticipate challenges before they’re encountered.

In this article, we look at joint ventures in some detail, and touch on the importance of strong JV software to generating successful outcomes in joint ventures.

What is Joint Venture?

A joint venture is a business arrangement wherein companies pool resources and create a new legal entity with specific strategic goals. The organizations which create the new entity under the terms of the joint venture will share ownership, risks and returns, and governance of the entity.

The strategic motives for creating joint ventures can include anything from pooling R&D resources to entering new geographical markets (see section which follows).

Why Consider a Joint Venture?

The genesis of a joint venture is that bringing the resources of two or more companies together is often a more effective way to achieve strategic objectives than attempting to do so alone.

As strategic M&A shows, firms can complement each other in unexpected ways. But for a myriad of reasons, M&A might not be the immediate answer for the companies looking to achieve these strategic objectives.

This is where joint ventures enter the picture.

strategic options and the position of joint venture

Aside from the advantages of joint ventures (see below), which are also motivating factors for JVs, the following reasons often underpin the decision to undertake joint ventures:

Lack of resources

Not every company has the resources to immediately undertake an M&A transaction. In the short-term, JVs can offer an alternative to achieve many of the same objectives, with much lower resource requirements.

Opportunistic JVs

On occasion, an opportunity to create a JV will present itself to the participants which will seem too obvious an opportunity to refuse (most commonly seen in cross-industry JVs). In such cases, joint ventures are born.

Risk mitigation

The most commonly cited benefit of JVs is their potential for risk mitigation.

Time constraints

When an opportunity has to be exploited within a certain timeframe to fully enjoy its benefits (e.g. a new licence being granted), companies may need to pool resources through JVs or risk missing out on those benefits.

Other reasons dealmakers form JVs are as follows:

Types of Joint Ventures

There are generally considered to be four types of joint ventures: vertical joint ventures, horizontal joint ventures, project joint ventures, and functional joint ventures. We look at each in more detail in the bullet points which follow:

Vertical joint ventures

These joint ventures are created by two or more companies operating at different positions along a vertical supply chain . An example could be a producer and a materials provider creating a JV.

Horizontal joint ventures

Formed by companies who would otherwise be competitors (i.e. in the same horizontal space ), horizontal joint ventures should enable all involved to enjoy the advantages of joint ventures.

Project joint ventures

As the name implies, project joint ventures are established by two or more companies with the aim of developing a specific project. Often the joint venture is wound down as soon as the project’s objectives have been achieved.

Functional joint ventures

In this type of JV, two companies with complementary resources (functions) create a joint venture to enjoy synergies. For example, a company with an excellent product or service and a company with a large distribution network.

Joint ventureship and its archetypes exist on a spectrum between start-ups and M&A deals. Other varieties of launching joint ventures, based on the firms' business styles, include the following:

Joint Venture Examples

Hulu, the online streaming service, is often cited as the classic example of a joint venture. It began life as a joint venture in 2007 between NBC Universal, Providence Equity Partners, and News Corporation. These companies were later joined by Walt Disney. By pooling the media and investment resources of all four companies, the joint venture created something which was far more effective than the sum of its parts.

Cross-border joint ventures are also common.

One of the ways that brewing firm Heineken has achieved global ubiquity in bars has been through joint ventures with local players. An example of this came in 2016, when it created a joint venture in the Philippines with Asia Brewery Inc.

This example of an international joint venture enabled Asia Brewery to upgrade its brewing facilities and bring its operational practices in line with world class brewing standards, in return for distributing Heineken’s in-house brands across the country.

Joint Venture vs. Partnership

A joint venture is essentially a form of partnership which is more formally recognized.

Whereas a partnership usually entails a contract that demands both sides agree to fulfill certain criteria (e.g. commitment of resources), a joint venture involves both creating a new legal entity, wherein both share risks and returns as well as corporate governance.

Why not check out: Strategic Alliance vs Joint Venture: What's the Difference?

Partnerships of various forms which work well can often precede the formation of joint ventures. Here is a visualization of joint venture vs alliances (partnerships) and other transaction types:

joint ventures in the continuum of transaction types

Joint Venture Strategic Planning

A joint venture is effectively a variant of a merger , whereby rather than combining two companies to create one, the two companies contribute resources to create a third legal entity.

Free resource: Building a Sustainable Joint Venture Download your copy now!

Hence, much of the planning that surrounds joint ventures is very similar to that of a traditional merger: defining (preferably in measurable terms) the objectives of the joint venture, understanding how the JV partner fits with your own company culturally and operationally, and overseeing the successful implementation of the new entity, including its corporate governance.

“You can't have a dominant party in joint ventures. It just won't work because the other party will feel very disengaged. They will feel that they're not being heard.” Ivan Golubic, former VP of Corporate Development at Goodyear

We believe there are 5 key issues to consider when strategic planning for joint venture.

These include the following:

1. Defining Parameters and Objectives

Like any M&A transaction , the more definable and measurable the objectives of the JV, the more likely it is that the operation will be a success.

Having clear goals and objectives (e.g. nott expansion to the Canada market’ but ‘20 new restaurants operating in Canada within one year’) will also strengthen the proposition when pitching to potential partners.

2. Choosing the Right Partner

It goes without saying that for a JV to be a success , the partner chosen by a company has to be suitable.

What makes them a better fit from a cultural and operational perspective than anybody else? Are they fully committed to the venture? What issues, if any, can you foresee arising with them that could destroy value in the new venture?

Check out our interview of Rich Schaafsma, VP of Corp Dev at General Motors, about the best approach to source, create, and manage international joint ventures.

3. Defining Terms of JV

Even the most successful partnerships can go awry, so it’s important to formalize the terms of the joint venture as much as possible.

Everything from how appointments are made to dividends, investment of funds, and even existing possibilities (see below) should be in writing to avoid conflicts over the course of the Joint Venture’s business cycle.

4.Ongoing Supervision

Although the joint venture is a company in its own right, it’s still an investment for both the parent companies and as such, requires supervision. The JV will benefit from shared expertise and management that the parent companies provide it.

Many of the JVs that don’t end well are the ones that were simply overlooked as soon as the new entity was created.

5. Outlining Exit Possibilities

At what stage does your company plan to finish the JV and by what means?

No joint venture lasts indefinitely. They’re either wound down, acquired by one of the parent firms or a third party, or spun off on their own.

It helps to understand at the outset what your company’s eventual strategy is for an exit so that you’re fully prepared for it when the time arrives.

Resource conducted by McKinsey of 970 executives that concluded JVs backs these up.

Below, the results of the survey questionnaire are outlined, showing what executives believed to be the main reasons for the success or failure of their own companies’ joint ventures.

what executives believed to be the main reasons for the success or failure of their own companies’ joint ventures.

Advantages and Disadvantages of Joint Ventures

Advantages:.

Shared resources to achieve greater outcomes: By pooling resources with other participants in a joint venture, companies can enjoy benefits beyond what would be possible on their own.
Lower risks: In theory, well-planned and developed joint ventures (see previous section) should enable all participants to enjoy lower risks through lower capital committed than other means to achieve the same objectives (e.g. M&A transactions).
Access to new expertise, technology, and capabilities: All participants in JVs should ideally benefit from access to the expertise, technology, and capabilities of the other participants in the JV agreement.
Market access: Sometimes, particularly in the case of cross-border JVs, companies gain faster access to new markets. In the case of Heineken, the merger with Asian Breweries Inc. gave it distribution across one of Asia’s fastest growing markets.
Synergy benefits: All of the advantages mentioned so far essentially come down to synergies : The ability of JVs to become greater than the sum of their parts, and creating an incentive for the participants to contribute for greater gains.

Disadvantages:

Conflicting corporate cultures are common: Many joint ventures have failed owing to corporate cultures at the participants which just couldn’t find a middle ground. The end result is usually value destruction.
Unequal distribution of benefits: It’s unlikely that a joint venture, even a well-planned one, will distribute non-monetary benefits equally to the participants. When the benefits are widely disparate, dissatisfaction with the JV can emerge.
Unequal division of work or resources: Even with equal management from all parent companies at the JV, it can be nigh on impossible to equally divide work or resources between them, inevitably causing friction within the JV.
Potential IP theft: When a large US motor company and a rival Japanese motor company terminated what seemed an unlikely JV in 2012, shortly after creating it, the suspicious was that one or both participants had stolen the other’s trade secrets.

Joint Venture Process

Following is an fascinating insight during an interview with M&A Science about making JVs successful with Ivan Golubic:

“Talk about things that are uncomfortable while you're still friends, not after you get in a fight or in an argument with the other side.” Ivan Golubic, Executive Director, Gamma Corporate Development

This might be the overriding message for all JV processes: Honest, straightforward communication is key to successful outcomes.

All joint venture processes include the following steps:

1. Planning

Which includes issues such as asset contribution and equity stake of the participants, scope definition, strategy and business plan development, and even the exit plans. Below are the results of McKinsey's interviews . They also cite: “We continually fall prey to the pressure to get a deal signed and then forget to plan for operational realities.”

2. JV Formation

Which includes operational planning, parent company service agreements, definition of management and decision rights, and more. It is crucial that this stage also includes a solid dispute mechanism design.

3. JV Operation

Integration and/or setup of functional areas (HR, IT, etc.), capital management, management decision making and governance, and capturing of synergies.

This should be planned for at the outset of the JV, but when being implemented, should look at issues such as valuation of the JV, resolution of any outstanding issues within the JV, buyer selection and JV deal structuring.

Here is a 4-step process to executing exit negotiations:

According to a research conducted by JV Alchemist, it's critical to focus on the primary issues in the JV process early. All of the must-have items should be addressed within the first 2 months.

Factors to consider before signing an agreement with another firm

Is the other firm in the JV capable of delivering on their mandate in the JV?
What resources need to be committed by each of the firms?
How much of a fit is the other firm, and could a better fit be relatively easily found?
What is the worst case scenario if the JV fails?
What are the risks inherent in beginning the JV with the other firm?

Making Joint Ventures Successful

The interview with Ivan Golubic cited above notes several points for ensuring successful JVs. The most important of these are:

Trust: “Both parties need to be approaching the deal in good faith, and in it for the right reasons.”
Alignment: “Both parties need to be able to work together and have an overall alignment of how they would get things done.”
Defined objectives: “Define what success means for the joint venture itself. Put objective and measurable KPIs so you have clear and achievable goals.”
Joint leadership: “Both parties need to feel happy with the choice of leadership in the joint venture. There has to be a complete parity between parties.”
Good exit strategies: “If it doesn’t work out, both parties should know what to do to resolve the problem and preserve their relationship.”

Below are 5 other elements that must be considered in the planning, structuring, and negotiations of a fresh joint venture.

Strategic Plan for Successful Development of Joint Ventures

Define measurable objectives.

What are the goals your company is seeking to achieve?
Why are these better achieved with a JV partner?
What value proposition can your company bring to a JV partner?

Draw up a shortlist of potential JV partners

Are there companies your company already works with that represent potential partners?
What traits are you looking for in a partner company or its management?
How will you ensure buy-in from the partner company?

Negotiate with potential JV partners

Understand what they want from the deal.
Seek to identify synergies between the companies and the management.
Identify and attempt to mitigate where difficulties may arise between the two firms in the joint venture.

Create terms of JV agreement

The more defined the terms at the outset, the less likely disputes will arise.
Insert clauses for profit sharing, management input, and eventual exit.

Oversee running of JV in accordance with terms of JV agreement

Exit according to your company’s own strategic plans, the importance of due diligence in joint ventures.

The general assumption - which is cited here - is that joint ventures are lower risk than M&A. While this is broadly true, it would be wrong to believe that the risks are so low that due diligence isn’t required.

To take just one example: As outlined above, joint ventures can often involve disclosing confidential and valuable company information to the other party. This is always a risky endeavour. And it’s not a risk that exists in M&A transactions.

The general differences between due diligence in JVs from M&A are outlined below:

The importance of due diligence in joint ventures

How DealRoom Can Help

DealRoom can be an invaluable partner to both sides of the joint venture process. This value begins at searching out partners and continues until the JV exit has been implemented.

The benefits that can be obtained by using DealRoom’s project management tool include:

The ability to management the complex demands of a joint venture, minimizing the risks inherent from the planning stage all the way to exit.
Better communication between the JV participants and the JV itself, providing a single source of truth for all participants.
Full management oversight of the JV for all parties, ensuring that the JV doesn’t become a ‘black box’ for either party once operations have begun.

Expert Guide: The M&A process for buyers and sellers

Get your M&A process in order. Use DealRoom as a single source of truth and align your team.

Get weekly updates about M&A Science upcoming webinars, podcasts and events!

Partners in profit: Creating successful business alliances

In this episode of the Inside the Strategy Room podcast, Ruth De Backer and Eileen Kelly Rinaudo share insights on ways to manage business partnerships successfully. In their conversation with Strategy & Corporate Finance communications director Sean Brown, they discuss the four key principles that help partners in joint ventures and alliances thrive, which they wrote about in a recent article . You can listen to the episode on Apple Podcasts , Spotify , or Google Podcasts .

Sean Brown: From McKinsey’s Strategy & Corporate Finance practice, I’m Sean Brown. Welcome to Inside the Strategy Room. In this episode we talk to two of our experts about ways to make joint ventures and alliances more successful. The better companies do at managing such increasingly complex partnerships, the more likely they are to emerge as partners of choice for tackling new markets or channels. Ruth De Backer is a partner in our New York office and leads our global joint ventures and alliances work within the M&A practice . Eileen Kelly Rinaudo, also based in New York, is a senior expert on transactions.

Ruth, let me ask you first: how do such partnerships typically evolve? Do companies start with small joint ventures and then expand them?

Ruth De Backer: A lot of it tends to be industry-specific. In some industries, such as the pharmaceutical sector, partnerships tend to focus on specific products, so if you get a successful product, you may work on development for five years and have a patent life of another ten years. Now we see lots of partnerships with finite objectives in the digital sector as well.

In industrial sectors, companies often turn to partnerships to access new geographies, and these tend to be larger joint ventures. Some companies are starting to partner with more digital firms as well to gain new capabilities. It also tends to shift over time. We’ve heard people say at the start of a partnership, “It’s going to be five years, just to help us put a beachhead in China,” but then the companies want to scale up and carry on for decades.

Eileen Kelly Rinaudo: It’s important to recognize that having a partnership end doesn’t mean failure. It can end very successfully because it has achieved its objective. The key is to make sure you have the capabilities and tracking mechanisms in place so you can adjust as a partnership evolves.

Sean Brown: What are some of the unique challenges in managing joint ventures and alliances?

Ruth De Backer: The main reason partnerships need somewhat different management attention is that you don’t operate a joint venture in the same the way you would operate your own business unit. First, you have multiple owners, each with their own characteristics, so you need alignment of objectives among the partners. Otherwise, the partnership becomes inherently unstable.

Second, you create a new entity with its own independent character. It has its own culture that is usually a blend of the two partners’ cultures, and it has its own objectives and strategy. The governance of such partnerships is quite complex, and certain questions require a lot of thought. For example, if they have a formal structure with a board, who sits on the board? How often do you rotate the board members? How is the board involved with leadership? Complex governance structures can lead to slower decision making, which can cause friction among the partners.

Finally, there is the issue of partner interdependence, especially in operations, with one or both partners providing services to the separate entity.

Sean Brown: What do you see as the key factors that determine whether a joint venture or alliance succeeds?

Ruth De Backer: We surveyed several hundred people involved in business development and management of partnerships and asked them what is most critical for partnership success. We saw clearly that two factors contribute the most to the success of partnerships, and, when they are absent, to their failure. One is being clear on the venture’s objectives and strategy, and the second is communication and trust, because you are dealing with other human beings and it comes down to whether you trust the people you work with day to day (exhibit).

The third and fourth are governance and key performance indicators (KPIs), which really speak to the systems and processes for accountability and clarity on what you’re tracking, and what you want the management of the partnership to achieve. The last is a factor that’s less important to success than it is to avoiding failure: a plan for restructuring. The world changes. The partners will change. How easily you adapt to a changing environment, or changing strategic objectives, or changing markets will determine the partnership’s fate.

Sean Brown: Eileen, what did this research suggest to you in terms of how leaders should approach the management of partnerships?

Eileen Kelly Rinaudo: As we looked at these factors, we tried to figure out what the major levers were from a management perspective. We saw that the first focus has to be on establishing a clear foundation. In the preparation phase, that means making sure there is alignment within every department on the objectives and priorities. Sometimes this early phase is short-circuited. It’s also useful to involve team members who are experienced in negotiations in those alignment discussions. Ideally, you also have your operating team and your management team already involved during the negotiation phase so there is a clear understanding of the overall market and objectives. Without those expectations being defined, setting up the next phase of KPIs and processes will be much more difficult, along with making sure everybody has clarity on their roles.

Sean Brown: In establishing that clear foundation, are there particular failure points that you tend to see with clients?

Eileen Kelly Rinaudo: We often see people walk into negotiations thinking they are all on the same page, but because they haven’t taken a disciplined approach to getting things articulated and written down, they end up disagreeing with their own teammates about what they are trying to achieve. It’s important to make sure you get that done before you walk into the negotiation room—that’s the number-one failure point.

Ruth De Backer: One thing I would add is, be mindful of who the ultimate decision makers are. It’s especially important when negotiating with private-equity-owned companies. The private-equity owners’ timeframes and objectives may be different from the management’s, and it is really important to know who is at the other side of the table. Otherwise, they could swoop in at the last minute, and if your objectives don’t meet their exit plans, that would jeopardize any agreement.

It’s sometimes easy to wave your hands a bit and assume everybody is on the same page on the big issues. But making sure those perspectives are clearly defined becomes exponentially more important as you deal with broader topics, bigger partnerships, and longer timeframes. Eileen Kelly Rinaudo

Eileen Kelly Rinaudo: That kind of preparation becomes even more important when you think about who should do what task and how you will manage operations. Sometimes you get focused on the day-to-day and lose track of the decision makers who need to be incorporated into the ongoing discussions. You should consider how to handle the alignment when you have a mixed partnership portfolio or a large joint venture or a group of smaller alliances. Smaller partnerships tend to have more clearly defined objectives, and joint ventures tend to be more all-encompassing. As a rule of thumb, the broader the partnership, the more critical it is to have clarity on your priorities and strategy. It’s sometimes easy to wave your hands a bit and assume everybody is on the same page, especially when it’s about big issues on which you think people would have a similar perspective. But making sure those perspectives are clearly defined becomes exponentially more important as you deal with broader topics, bigger partnerships, and longer timeframes.

Sean Brown: Can you discuss some specific ways managers can make sure everyone agrees on those core perspectives?

Eileen Kelly Rinaudo: When we think about the partnership strategy across the design, launch planning, and post-launch phases, there are a couple different techniques we can use. First, bringing in your operational and management teams early is a best practice because it ensures everybody understands how strategic decisions are made and what the major value-creation opportunities for the partnership are. During launch, we again come back to communications. It’s critical to communicate frequently and clearly, and to be sure everybody has a similar set of expectations.

When tracking performance, you want to make sure that you clearly define the KPIs early in the process. How are you going to evaluate the partnership’s performance over time? Dashboards are very helpful. And finally, the financial aspects. You have to make sure that financial incentives are clearly defined and that you understand the financial flows.

Sean Brown: Once you have established that foundation, what is the next big lever that partnership managers need to pull?

Eileen Kelly Rinaudo: One of the most critical aspects of successful partnership is maintaining a positive and productive relationship. While people work hand-in-hand with their own teammates, they also work with individuals from another company, and that dynamic can create some tension. The two groups don’t necessarily have the same approach, they don’t necessarily communicate in the same fashion, whether electronically or in person, and they come from different cultures.

As a result, you have to put a lot of effort into finding opportunities to build trust and keep communication flowing. Make sure the teams can connect socially, and that it’s not all about business, so they can get to know each other and understand how each approaches problems. This should start even prenegotiations, and continue right through the management phase.

Sean Brown: I would think cross-border and cross-cultural partnerships create some challenges on that front. Can you share any advice on how to overcome those barriers?

Eileen Kelly Rinaudo: Cross-border partnerships are tricky. However, because people expect those differences, they put in some extra time and care making sure they address the different communication styles, and that they understand and appreciate the different cultural situations. Unfortunately, that sometimes stops at the negotiation phase, whereas it should be encouraged and role-modeled on a continual basis.

Understanding the cultural predilections and how people want to operate can be tremendously helpful in cross-border situations. Sometimes, it requires a little bit of cultural training. Sometimes, it’s about a shift in your communication style. For example, some people like to have meetings that are all action—you send out a preread, everybody does their homework, they walk in ready to problem-solve on any sticky situations—they want a strong, working team meeting. Others walk in and want to review the progress to date, then they want to think about a tricky situation, and then have committee meetings and smaller group discussions to come to the answer. Knowing what type of meeting you are walking into is critical because you could have the best of intentions and yet a horrible meeting.

Domestic partnerships deserve the same level of thoughtfulness too. They require the same understanding of your partner’s communication style and culture. That sometimes gets missed, in particular as we see more partnerships between traditional industries and innovation-driven industries.

Subscribe to the Inside the Strategy Room podcast

Ruth De Backer: Having an explicit conversation about this is very important. People should be aware that a Japanese partner, for instance, will have a final sign-off meeting that is quite different from the American style, where many issues could still be open for discussion. Digital companies are accustomed to releasing beta versions and tinkering with solutions. Compare that with pharma, where they have ten-year development cycles, or oil and gas, where the exploration phases take a long time and if you make a mistake, you can’t say, “Oh, we drilled a well in the wrong place. Now let’s move it six months later.” So being aware of how the partner makes decisions is key. You may think, “Well, we’re both from the Midwest, we have a similar culture. They’re innovation-driven. We’re innovation-driven.” But it’s what is under the surface that needs to get exposed.

Sean Brown: That’s helpful. Are there other elements to nurturing the relationship with your partner?

Eileen Kelly Rinaudo: There needs to be clarity from a corporate perspective on the capabilities and motivations, and who is best suited to what task. Sometimes individuals or organizations get attached to doing one task or another. We worked with two consumer companies that wanted to set up a joint venture and the first company walked in expecting it would be in charge of all the financial aspects. About halfway through the negotiations, they realized their counterpart was actually very rigorous and thoughtful about their financial assessments and KPIs, and had strong procedures in place. The first company ended up having one of its senior executives lead the finance team but leveraged its partner’s finance team, processes, and dashboards.

That brings up the final point in nurturing relationships, which is involving the right personnel. Having senior sponsors for the partnership is critical. They should be there in the internal partnership-design phase and through the negotiations and launch and management of the partnership. Those sponsors should stay involved, both in terms of ensuring there is clarity in the decision making and to course-correct if the situation warrants. You also need a partnership management team within the parent organization, which monitors the cross-company relationship. And then, of course, experienced negotiation support is key because you want to make sure people are going after a “1 plus 1 equals 2.5 or 3 or 4” result, and not a “we win and you lose” kind of mentality.

Sean Brown: Can you elaborate a bit on the tools and processes that you would recommend?

Eileen Kelly Rinaudo: We mentioned the issue of agendas—these are critical. How are you handling meetings? How do you make sure that agenda items are addressed ahead of time? Similarly, you have to make sure you define the KPIs for the performance updates, and even more importantly, define why and how your KPIs reflect the goal. It can be hard for an operating team or a management team to track thousands of KPIs, so you have to define which ones really matter. The last process is the portfolio review, making sure you have time set aside to review the performance of each partnership and how it is furthering the strategy of your parent organization.

Finally, as we think about the tools, obviously the financial models and guidelines are important. Those get a lot of discussion because everybody thinks in terms of hitting financial targets, but it’s also important to think about the tools you will use for that tracking—especially when you have a portfolio of partnerships or multiple similar partnerships.

Sean Brown: Do you find that most partnerships have these tools and processes in place?

Eileen Kelly Rinaudo: In our survey, we asked companies whether they had tools to support their joint ventures and alliances, and we had some surprising results. About half the respondents did not have the financial models and guidelines for financial evaluations. That’s lower than we expected. But it was nothing compared to the surprise of learning that very few companies have the playbooks to support the launch and ongoing management of their partnerships.

Sean Brown: What about accountability? I assume many of those processes and tools are intended to track that. Ruth?

Often, companies say they track metrics, but it turns out they only track their own—they don’t care whether their partner is successful! But partnership is a bit like a marriage: you want to know whether your partner is happy as well because otherwise the relationship won’t last very long. Ruth De Backer

Ruth De Backer: There are two parts that underpin accountability. One is governance and the other is performance metrics. On governance, most people think about who the CEO will be and how the CEO/chairman role will be split, but we emphasize that governance starts with structure. The most successful partnerships have one central point of accountability—the CEO of the joint venture, or the central management team, and an active board. You do want to link back to each partner organization and the board should provide that link, but not in all the decisions.

We also like to see independent board members in joint ventures. The board should not consist solely of executives from the partner organizations. Instead, think about capabilities you may need on the venture’s board and find independent directors who have them. As for roles and responsibilities, the management’s and the board’s roles need to be clear. You don’t want the joint venture to function like a kids’ soccer team where everyone wants to be involved in all the decisions. Certain veto rights are the role of the board, especially on capital allocation and key executive appointment, but otherwise the board should track performance and intervene when metrics are missed. For that, you need regular meetings that track partnership performance. Where are we falling behind? Do we need to evolve this partnership, or expand it because it’s so wildly successful?

And be mindful that these have to be joint metrics. Often, companies say they track metrics, but it turns out they only track their own—they don’t care whether their partner is successful! But it’s a bit like a marriage: you want to know whether your partner is happy as well, because otherwise the relationship won’t last very long.

Sean Brown: Can you share any examples of a partnership governance structure that worked well?

Eileen Kelly Rinaudo: In one situation, two energy companies created a joint venture to reduce cost and risk, inked the deal rather quickly, and ended up with a board of 28 people. That’s very large. All of the board members were from the two parent companies, and they ended up getting mired in these long meetings. The board also felt the need to control virtually all decisions, which made the management team very frustrated, understandably, and made everything very slow. There was confusion about what the operating team was supposed to be doing and how they were being judged. The lack of efficiency during board meetings and in the joint venture’s operations became a critical point.

So, the companies restructured the governance processes. They clarified the roles and responsibilities for the board and operating team—first, in who was in charge of which pieces and, second, giving the board members more of a committee-like approach. They also reduced the board to 11 members. The committee structure made the meetings much more efficient because the full board would deal with committee recommendations that it either ratified or sent back. And, importantly, the operating team became much happier and more effective.

Sean Brown: That brings us to the final of your four levers, which is about making the partnership dynamic. How much change typically happens over the course of a joint venture or alliance?

Ruth De Backer: Most partnerships experience change either in external environments or internal roles. A partnership is a living, breathing thing. In our survey, among alliances that were deemed successful, four out of five had at least one restructuring, and of those that remained unchanged only a third survived. As for what elements of a partnership change, it could be pretty much anything. Some partnerships go into entirely different markets over time. The governance and the board’s composition may change. The decision-making terms may change. You may evolve your KPIs, especially as you change your strategy. Organization of talent—oftentimes partnerships start with legacy employees from partner companies, but as the organization works to adapt to the competitive situation, it brings in outside talent. So, don’t be afraid to evolve the partnership, and make your negotiations reflect this, putting in place mitigation plans and formulas on how things may change.

Sean Brown: So, of these four levers, which do you find is most important, or the one on which people most frequently stumble?

Eileen Kelly Rinaudo: I’d say those are two separate questions. The clear foundation is probably the most critical, because without that you are potentially wasting your time. The one that most people miss is the ability to have this dynamic partnership and setting up the reevaluation and restructuring mechanisms ahead of time. People have a very negative view of restructuring, and it isn’t actually a negative thing.

Sean Brown: Would you advise then that partners discuss the conditions that might require a potential restructuring even at the early partnership stage?

Eileen Kelly Rinaudo: Best practice is absolutely to have clear triggers for reevaluation. Ideally it would be every year for the first five years, and then every two or three years after that, the partners should evaluate whether they are still achieving their goals and what needs to shift. So instead of saying whether we need to shift, it’s what needs to evolve, because it could be something very small and simple or it could be something wide-reaching and complex.

Ruth De Backer: Things often morph over time. The people who negotiated the partnership may have been very clear on the foundation for it, but then the operators, and especially the second-generation operators, may not be fully aware of that foundation. If you put together the dynamic partnership and the metrics, it’s a way to keep everyone aligned over time.

Sean Brown: How do you decide when a joint venture or alliance is the right solution, and when you should look at a merger or an acquisition instead?

Eileen Kelly Rinaudo: That’s complicated. I’d say the order is usually M&A versus a joint venture, and then joint venture versus alliance, and alliance versus contractual agreement. That’s the spectrum you usually see. In terms of M&A versus joint venture, you should ask yourself, are you the right company to buy and operate the asset? Because if the answer is yes, then M&A may be preferable. The control can be quite appealing. However, if you are not the right owner and don’t have the skill sets to operate the asset, you can destroy value, whereas a joint venture may be safer, if a bit more complicated. Also, there are situations where regulatory constraints, geographic concerns, or just the fact that you can’t get access to the right assets might make a joint venture the right path.

Sean Brown is McKinsey’s global director of communications for strategy and corporate finance and is based in the Boston office, and Ruth De Backer is a partner in the New York office, where Eileen Kelly Rinaudo is a senior knowledge expert.

Explore a career with us

Negotiating a better joint venture

IandP_MoF52_Joint-ventures_1536x1536_Original

Joint ventures on the rise

Avoiding blind spots in your next joint venture

Legal Issues in Joint Ventures

Joint ventures involve complex legal issues that require careful consideration to guarantee success. A well-structured agreement is pivotal, outlining terms, roles, and responsibilities to avoid confusion and disputes. Effective risk allocation and liability sharing arrangements are also paramount, as are measures to protect intellectual property and confidential information. Clear dispute resolution mechanisms and compliance with antitrust and competition laws are equally significant. By understanding these critical legal issues, joint venture partners can mitigate potential pitfalls and guarantee a successful collaboration. As the partnership evolves, a deep understanding of these complexities will be necessary to navigate the inevitable challenges that arise.

Table of Contents

Structuring the Joint Venture Agreement

A well-structured joint venture agreement is pivotal to establish a clear understanding of the parties' rights and obligations, allocate risks and responsibilities, and provide a framework for decision-making and dispute resolution. This agreement serves as the foundation of the joint venture, outlining the terms and conditions of the partnership. It is imperative to ponder the tax implications of the joint venture structure, as different structures can have varying tax consequences. For instance, a joint venture may be structured as a partnership, corporation, or limited liability company, each with its own tax implications. In addition, cultural differences between the parties must also be taken into account, as they can substantially impact the agreement's terms and the joint venture's overall success. A thorough understanding of each party's cultural nuances and business practices is paramount in drafting an effective agreement. By carefully structuring the joint venture agreement, parties can mitigate potential risks and guarantee a successful collaboration.

Defining Roles and Responsibilities

Clearly defining the roles and responsibilities of each party is crucial to avoid confusion, guarantee accountability, and facilitate seamless collaboration within the joint venture. This entails establishing clear expectations and decision-making authorities to certify that each party understands their obligations and the scope of their involvement. A well-defined role and responsibility framework enables joint venture partners to work together effectively, make informed decisions, and allocate resources efficiently.


	Responsible for project management, including scheduling and budgeting.
	Responsible for technical expertise, including design and development.
	Responsible for overall strategy and decision-making, including conflict resolution.
	Responsible for providing guidance on industry trends and best practices.
	Responsible for day-to-day project execution and delivery.

Allocating Liability and Risk

When establishing a joint venture, allocating liability and risk is vital to guarantee that all parties are aware of their potential exposure. This involves determining the methods for allocating risk and developing strategies for sharing liability. Effective risk allocation and liability sharing arrangements can help mitigate potential disputes and guarantee the long-term success of the joint venture.

Risk Allocation Methods

Risk allocation methods in joint ventures involve deliberate assignment of liability and risk to specific partners or entities, thereby allowing for more effective management and mitigation of potential losses. This approach enables joint venture partners to identify, assess, and allocate risks in a structured manner, facilitating proactive risk mitigation and uncertainty management. By allocating risks to specific partners or entities, joint ventures can minimize potential losses, optimize resource allocation, and enhance overall performance.


	Allocates risks through contractual agreements, specifying liability and responsibility for specific risks.
	Transfers risks to insurance providers, reducing financial exposure and providing protection against unforeseen events.
	Divides risks among joint venture partners, proportionate to their respective stakes or contributions.
	Provides assurance or protection against specific risks, often through third-party warranties or collateral.

| Limited Liability | Restricts partners' personal liability, limiting financial exposure to the joint venture's assets.

Liability Sharing Strategies

In conjunction with risk allocation methods, joint ventures can implement liability sharing strategies to further distribute and manage liability and risk among partners. These strategies enable joint venture partners to allocate liability and risk in a more nuanced manner, taking into account the specific circumstances and requirements of the project. One common liability sharing strategy is the use of limited assurances, where partners agree to assure a specific portion of the project's liabilities, rather than assuming unlimited liability. Another approach is cross indemnity, where partners agree to indemnify each other against specific types of liabilities or risks. This can help to allocate liability and risk more efficiently, and provide greater certainty and protection for partners. By implementing liability sharing strategies, joint ventures can better manage and allocate liability and risk, and create a more stable and sustainable partnership. Effective liability sharing strategies can also help to build trust and confidence among partners, and facilitate more successful and profitable joint ventures.

Protecting Intellectual Property Rights

Establishing clear agreements and protocols for the use, ownership, and protection of intellectual property is crucial in joint ventures, as the collaboration and sharing of resources can create vulnerabilities for IP theft or misappropriation. To mitigate these risks, joint venture partners should implement robust IP protection measures, including confidentiality agreements that outline the scope of confidential information, restrictions on use and disclosure, and consequences for breach.

Confidentiality agreements are indispensable in joint ventures, as they provide a legal framework for protecting sensitive information and trade secrets . These agreements should be exhaustive, covering all aspects of IP protection, including patent, copyright, and trade secret protection. Additionally, joint venture partners should establish clear protocols for the handling and storage of confidential information, including access controls, encryption, and secure data storage.

Managing Dispute Resolution Mechanisms

Effective management of joint ventures requires careful consideration of dispute resolution mechanisms to mitigate potential conflicts. A well-structured dispute resolution framework can help prevent disputes from escalating and guarantee the continued success of the venture. By incorporating clear dispute resolution provisions and mechanisms for conflict resolution, joint venture partners can minimize the risk of disputes and guarantee a smooth operational flow.

Dispute Resolution Provisions

Dispute resolution provisions are a crucial component of joint venture agreements, as they provide a framework for resolving conflicts that may arise during the partnership. These provisions outline the process for addressing disputes, certifying that potential conflicts are managed efficiently and effectively. A well-drafted dispute resolution provision should identify dispute triggers, such as breaches of contract or disagreements over decision-making authority. This clarity enables parties to quickly respond to conflicts, minimizing the risk of protracted disputes that can jeopardize the joint venture's success.

Arbitration options are a common feature of dispute resolution provisions in joint venture agreements. Arbitration provides a neutral forum for resolving disputes, allowing parties to present their cases to an impartial arbitrator. This approach can be particularly useful in international joint ventures, where traversing different legal systems and jurisdictions can be complex. By incorporating arbitration options into the dispute resolution provision, parties can guarantee that disputes are resolved in a fair and efficient manner, minimizing the risk of costly and time-consuming litigation .

Mechanisms for Conflict Resolution

Implementing a multi-tiered approach to conflict resolution enables joint venture partners to manage disputes in a structured and efficient manner. This approach typically involves a combination of negotiation, mediation, and arbitration. Mediation clauses are often included in joint venture agreements, providing a platform for partners to resolve disputes through facilitated negotiations. If mediation is unsuccessful, parties may proceed to arbitration, which offers a binding and enforceable resolution. Arbitration awards are generally final and binding, providing a clear and decisive outcome.

Effective dispute resolution mechanisms are vital in joint ventures, as they enable partners to address conflicts promptly and avoid protracted litigation. By incorporating multi-tiered dispute resolution mechanisms into their agreements, joint venture partners can minimize the risk of disputes escalating and guarantee that their partnership remains focused on achieving its objectives. In addition, these mechanisms can help to maintain a positive and collaborative relationship between partners, even in the event of a dispute. By adopting a structured approach to conflict resolution, joint venture partners can guarantee that their partnership is well-equipped to manage disputes and achieve long-term success.

Navigating Antitrust and Competition Laws

In the context of joint ventures, antitrust and competition laws impose significant constraints on collaborative activities, particularly those involving competitors or potential competitors. These laws aim to promote competition and prevent anti-competitive conduct, which can lead to market dominance and stifle innovation. Joint venture partners must navigate these laws to avoid compliance risks, including fines, penalties, and reputational damage.

Compliance risks arise when joint ventures are structured in a way that restricts competition, such as by allocating markets or fixing prices. Partners must guarantee that their collaboration does not lead to market dominance, which can be detrimental to consumers and other market players. To mitigate these risks, joint venture partners should conduct thorough antitrust and competition law analyses before entering into a joint venture agreement. They should also implement compliance programs to guarantee that their joint venture activities are transparent, proportional, and do not restrict competition. By doing so, partners can minimize the risk of antitrust and competition law violations and guarantee a successful and sustainable joint venture.

Terminating the Joint Venture Partnership

As joint venture partners navigate the complexities of their collaborative agreement, they must also consider the potential need to terminate the partnership, whether due to unforeseen circumstances, shifting business priorities, or simply the natural expiration of the joint venture's purpose. Terminating a joint venture partnership can be a complex and challenging process, involving the dissolution of business relationships, the allocation of assets, and the settlement of outstanding debts.

To guarantee a smooth and efficient termination, joint venture partners should consider the following key factors:

Exit strategies : Developing a clear exit strategy at the outset of the joint venture can help mitigate potential disputes and facilitate a more orderly dissolution of the partnership.
Partnership dissolution : The terms of the partnership agreement should clearly outline the procedures for dissolving the joint venture, including the allocation of assets, liabilities, and intellectual property.
Notice and termination provisions : The agreement should specify the notice period required for termination, as well as the grounds for termination, such as material breach or insolvency.
Dispute resolution mechanisms : Establishing a dispute resolution mechanism, such as arbitration or mediation, can help resolve any conflicts that may arise during the termination process.

Frequently Asked Questions

Can a joint venture be used for a single project only?.

Yes, a joint venture can be established for a single project only, where the project scope is well-defined and collaboration terms are carefully outlined to guarantee a successful, limited-term partnership.

How Do I Protect My Brand in a Joint Venture Partnership?

When entering a joint venture partnership, protect your brand by conducting thorough due diligence on the partner's brand reputation and ensuring robust contractual provisions to mitigate trademark risks and prevent brand dilution.

Are Joint Ventures Only for Profit-Making Entities?

Joint ventures are not limited to profit-making entities; they can also involve non-profit collaborations and social enterprises, fostering mutually beneficial partnerships that drive social impact, innovation, and sustainability, beyond financial gains.

Can a Joint Venture Have More Than Two Partners?

A joint venture can indeed have more than two partners, introducing complex partnership dynamics and exponentially increasing venture complexity, which necessitates clear contractual agreements and effective communication to guarantee successful collaboration and dispute resolution.

Do Joint Ventures Require a Physical Office or Presence?

In modern business, joint ventures can thrive without a physical office or presence, leveraging virtual headquarters and remote collaborations to facilitate seamless communication and operation, allowing partners to work together efficiently across geographical distances.

UNLOCK YOUR COPY

International

U.S. Elections
Left Opinions
Mon David Pakman
Tue Ruben Navarrette
Wed Adrienne Lawrence
Thu Jordan Reid
Fri Dr. Rashad Richey
Right Opinions
Mon Larry Lindsey
Tue Ben Weingarten
Wed Newt Gingrich
Timothy Carney
John Fortier
Matthew Continetti
Robert Doar
Fri Star Parker
Peter Zeihan
Dr. Frank Luntz
Weapons and Warfare™
America Speaks with Dr. Frank Luntz
Editorial Mission

GM and Samsung SDI announced a .5 billion deal to build a new electric vehicle battery plant in Indiana on Wednesday, August 28.

GM, Samsung announce $3.5 billion plan to build Indiana EV battery plant

By Jack Aylmer (Anchor), Evan Hummel (Producer), Jake Maslo (Video Editor)

America’s largest automaker, General Motors, and Samsung SDI announced that they have finalized a $3.5 billion deal on Wednesday, Aug. 28, to build an electric vehicle battery plant in New Carlisle, Indiana. Among the products that will be at the plant beginning in 2027 are prismatic cells. As EV technology evolves, experts note that this technology may become more prevalent in the industry.

Media Landscape

Bias distribution, gm delays indiana electric vehicle battery factory but finalizes joint venture deal with samsung, samsung sdi, gm sign contract for $3.5 bil. joint ev battery plant in us, samsung sdi, gm push ahead with $3.5b joint battery plant in us, untracked bias, samsung sdi and gm to invest $3.5 billion to build ev battery plant in the u.s., samsung and gm finalise $3.5bn us deal to build ev batteries, samsung sdi finalizes deal with gm to build $3.5bln joint ev battery factory in us, after stellantis, samsung to jointly make ev batteries with gm in usa, samsung sdi and gm to establish a joint venture to build a battery factory in the us, samsung sdi agrees to $3.5bn ev battery plant in us with gm, sta: general motors and samsung sdi to invest in a joint battery factory, gm and samsung sdi building $3.5 billion ev battery plant in indiana, samsung sdi, gm conclude joint venture deal.

Currently, GM uses Ultium batteries in its electric vehicles. However, prismatic cells offer better performance because they have greater energy than Ultium batteries, which leads to better performance.

Download the SAN app today to stay up-to-date with Unbiased. Straight Facts™.

Point phone camera here

The prismatic cells are also reportedly safer because they operate at “lower voltages” and have “higher thermal stability.” Additionally, they’re considered more durable because they require fewer connections, which means less cleaning and welding is needed.

The new factory will reportedly create more than 1,600 jobs and be on a 680-acre site. GM and Samsung SDI will reportedly not have to pay taxes for 10 years in exchange for paying for several infrastructure projects in the community, which total $4.5 million .

The deal between GM and Samsung SDI comes at a time when some rival automakers are pulling back their investments into EVs. While EV sales are still growing , they’re not growing as fast as earlier predictions suggested.

New EV facilities are expected to pop up in the near future. They are spurred on by the Biden administration’s tax incentives .

Ford said it plans to up its production capacity at its three battery plants and Stellantis announced plans to build a new battery factory in Indiana. BMW has also said it expects to open a plant in South Carolina .

MOST POPULAR

Migrants reportedly tried boarding two school buses in separate incidents near San Diego, putting parents and school officials on high alert.

Parents in California on high alert after migrants try to board 2 school buses

"Neither candidate is winning any awards for deficit reduction," Marc Goldwein said. Here's how the Trump and Harris stack up on the economy.

Whose economic policies are worse for the nation’s debt? Trump’s or Harris’?

The CIA has revealed the suspects arrested for a foiled terror plot against Taylor Swift’s Vienna show planned to kill tens of thousands of fans.

CIA official: Suspects in foiled plot to attack Taylor Swift shows aimed to kill ‘tens of thousands’

The Supreme Court has dealt a significant setback to the Biden administration's efforts to provide student debt relief, declining on Wednesday, Aug. 28, to reinstate the SAVE plan, a key part of the administration's broader strategy to ease the financial burden on millions of Americans. This decision leaves borrowers in limbo as legal challenges from GOP-led states continue to play out in the courts.

Supreme Court won’t revive Biden’s student loan debt forgiveness plan

Chris christie to teach yale course on running for political office, us wants haitian migrants’ ‘whipping’ lawsuit against it thrown out, conservative group sues education dept over race-based grant eligibility, shutdown of child’s ice cream stand leads to community fundraising effort, millions of dead fish hurt tourism in greece as investigation ensues, rio de janeiro cracks down on claw machines as illegal games of chance, crowdstrike offers $60m in credits; delta reports $500m loss, chinese hackers exploit zero-day vulnerability to target us infrastructure, x updates ai chatbot grok after election misinformation warnings, unbiased news. directly to your inbox. free.

Learn more about our emails. Unsubscribe anytime.

By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy .

Investing & super
Institutional
NetBank log on
CommBiz log on
CommSec log on

Help & support

Follow the data to make better business decisions

What can business leaders learn from the latest quarter’s data from CommBank iQ, which shows Australians are continuing to make spending trade-offs? The insights offer more than just a snapshot into consumer behaviour and can help businesses make informed decisions.

30 August 2024

Business leaders may be surprised to see the significant variance in consumers’ spending depending on where in Australia they live along with how old they are.

“When we look at consumers’ spending patterns across Australia, we can see that the national average spend per capita grew 2.2 per cent in the quarter to June 2024, compared to the same quarter last year,"

- makenna ralston, ceo of commbank iq, a joint venture between commbank and analytics company quantium..

“When we look at consumers’ spending patterns across Australia, we can see that the national average spend per capita grew 2.2 per cent in the quarter to June 2024, compared to the same quarter last year,” says Makenna Ralston, CEO of CommBank iQ, a joint venture between CommBank and analytics company Quantium.

“But if you break it down by geography, there are some interesting dynamics at play. Total average spending growth in Western Australia was much higher, at 3.9 per cent — the only state to outpace the 3.8 per cent growth in the consumer price index over the same period.

“At the other end of the spectrum, average spending in Victoria grew just 0.7 per cent. The ACT and NSW were not much further ahead, with growth below the national average at 1.3 per cent and 1.7 per cent respectively.”

So what’s driving this variance?

Ralston says more clues are revealed by a deeper dive into the data – which is based on an analysis by CommBank iQ of de-identified transactions from approximately 7 million Australians. She says the breakdown of spending on essentials versus discretionaries is particularly informative, essentials being broadly things that can’t be avoided – such as groceries, insurance, medical costs, utilities and transport – and accounting for just over 50 per cent of the average household budget, while the rest is the discretionary “nice to haves”, such as travel, eating out, apparel and leisure.

“Typically, you expect spending on essentials to be similar across the board, and broadly that’s been the case. The big difference can be seen in discretionary categories. In both Victoria and the ACT, discretionary spending went backwards during the quarter, and in NSW it just scraped up by 0.2 percent. In all other parts of the country, discretionary spending grew above 2.5 percent.”

Overall spend growth figures vary by state graph

Per capita spending on eating out, for example, was up four per cent in WA, but declined by almost one per cent in Victoria. Likewise, household goods spending was up four per cent in NT, but down almost four per cent in ACT.

Ralston speculates that the variance in NSW, ACT and Victoria could relate to the relative cost of housing in those parts of the country. “Putting a roof over your head takes a significant chunk out of your household budget,” she says.

Slicing the data in other ways also reveals consumers’ age and life-stage also correlates with significant variations in per capita spending.

“The 18 to 29-year-olds continued to pull back their consumption, reflected in a 2.8 percent spending decline – and this was led by significant falls in travel, apparel, eating out and entertainment during the quarter,” Ralston says. “On the other hand, growth in spending among those over 60 still outpaced CPI, with discretionary spending among this group up almost 10 percent.”

Among 18 to 29-year-olds, for example, spending on apparel dropped 11 per cent during the quarter, whereas it ticked up by six per cent among 70+ year-olds.

For business operators, Ralston says these geographic and life-stage variances underscore the importance of looking beyond national averages when making operational and capital allocation decisions.

“While there have historically always been spending differences between states, the divergence has become far more exaggerated since COVID hit and it doesn’t look to be smoothing out anytime soon.

“Relying on your own internal data could be costly when making decisions, such as where and how to direct marketing efforts, choices about geographic presence of retail outlets, what you stock, how much and at what price points.”

Businesses are able to outpace their competitors when they take a truly holistic view of the people they are serving, she says, seeking to understand how customers interact with their business and how their customers are interacting with the broader world. “That’s a 360-degree view of a customer – and the gap between market leaders and laggards is becoming wider when businesses are capturing value using insights to see the whole story of their customers.”

The national average, she adds, “can hide a whole number of nuanced stories. You should ask yourself. ‘Do you really know what’s going on or are you prepared to take a risk on a decision without knowing the detail behind the headline average?’”

Throughout the article, the change in average spend per capita compares the three months to June 2024 versus the same period in 2023.

Get the latest research, actionable insights and expert views on the big issues facing businesses.

Brighter Perspectives

Things you should know

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. You should consider seeking independent financial advice before making any decision based on this information. The information in this article and any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of its publication but no representation or warranty, either expressed or implied, is made or provided as to the accuracy, reliability or completeness of any statement made in this article.

CommBank iQ is a joint venture between the Commonwealth Bank of Australia ABN 48 123 123 124 and The Quantium Group Pty Ltd ABN 45 102 444 253.

IMAGES

Business Plan Template For Joint Venture
Top 7 Joint Venture Templates with Examples and Samples
Joint Business Plan Template Powerpoint
Joint Venture
Joint Venture Business Plan Template
Joint Venture Business Plan Template in Pages, Word, Google Docs

VIDEO

Joint Partnerships And Startups
Max Venture
Unit 3 : Business Plan l Part 2 l Entrepreneurship and New Venture Planning l Semester 4 l
Joint Venture
How to earn in Max Venture ! Max Venture Business Plan !
Accounts of Joint Venture Business || Session 3

COMMENTS

How to Write a Joint Venture Business Plan
Step 4: Your Executive Summary. Although the Executive Summary will be the first page of the joint venture business plan, it is always recommended you write it last. This page of your joint venture business plan provides a concise view of the business agreement. Depending on the joint venture activities, the section of the business plan will ...
What Is a Joint Business Plan (JBP)? Benefits & Best Practices
The companies considering a joint business venture should then share their individual business plans and discuss their mutual growth opportunities. This is where the general goals and areas of support can be defined. ... it will be easier to align with the partnering company on the shared vision of the joint business plan. 2. Create the Plan ...
A Guide to Joint Business Planning Best Practices
3. Value Chain Analysis and Multi-functional Execution. Conducting a value chain analysis is a best practice that can significantly enhance joint business planning execution. This subsection explores how organizations can identify value-creation opportunities at each stage of the collaboration.
Joint Business Plan (JBP): Benefits, Best Practices & Objectives
Implementing a joint business plan can bring numerous benefits to retailers and companies involved in the venture. Let's explore some of these advantages in detail: 1. Increased Alignment and Synergy between Partners. One of the key benefits of implementing a joint business plan is the increased alignment and synergy between partners.
What Is a Joint Venture and How Does It Work?
A qualified joint venture is a partnership that's run by spouses, each of whom participates in managing the business. For tax purposes, the IRS allows each spouse to file a Schedule C for their ...
Joint Business Plan: What It Is and How to Create One with Your
A joint business plan is a powerful tool that enables you and your partners to set clear objectives, develop strategies, allocate responsibilities, and align your efforts toward a shared vision. So, whether your business is just taking off or it's been around for a while, a joint business plan can help ensure its success.
The Secrets To Successful Joint Ventures
But with a joint venture, you can't start over. You need to have the right foundation in place before the deal is signed, with solid agreement on strategy and ways of working—as well as on how ...
Launching a World-Class Joint Venture
First, build and maintain strategic alignment across the separate corporate entities, each of which has its own goals, market pressures, and shareholders. Second, create a shared governance system ...
How to Start a Joint Venture
Step 4: Create a joint venture agreement. Create a joint venture agreement that outlines the terms and conditions of the joint venture, including the parties' roles and responsibilities, the project's scope, and the financial arrangements. The Importance of a Joint Venture Agreement. Having a joint venture agreement is crucial for the ...
Joint ventures and partnering
A joint venture involves two or more businesses pooling their resources and expertise to achieve a particular goal. The risks and rewards of the enterprise are also shared. The reasons behind forming a joint venture include business expansion, development of new products or moving into new markets, particularly overseas.
JOINT BUSINESS PLAN: Top 7 Secrets To Successful Joint Business Planning&
Let's take a quick rundown on them. #1. Have a Plan. It always pays off to have a strategic plan on standby in your joint business. Your joint partnership should kick off with careful planning. To aim this, review your business strategy to see if a joint venture is even the best way to plan and achieve it.
What Is a Joint Venture? How It Works & How To Set It Up
To ensure joint venture success, perform due diligence on potential partners, write a comprehensive agreement and business plan, and design an effective onboarding strategy. A joint venture (JV) is a business entity or project co-owned by two or more organizations targeting the same goal — e.g., to design an innovative product or penetrate an ...
How to Structure a Joint Venture: The Five Essential Elements of JV
The rationale for a joint venture — strategic and economic success metrics — should be sharply stated in ways that can be tested with the partner (e.g., market share of 15% in 5 years ...
Joint Venture: Prepare a Business Plan
The business plan should also include mechanisms to resolve disagreements between the JV partners, contingency plans, exit strategies, the terms of dissolution of the joint venture, and the a process to → make changes in the business plan in response to market changes, emerging opportunities, and customer feedback.
Joint business plan: Definition and tips
A joint business plan defines the state of the companies involved, the purpose of the joint business and the partners' responsibilities. A joint business plan describes all the activities that these business ventures must carry out to achieve specific goals. The relationship between the two parties and their goals must be clearly understood.
Joint Venture (JV): What Is It, and Why Do Companies Form One?
Despite the fact that the purpose of a JV is typically for production or research, one can also be formed for a continuing purpose. JVs can combine large and small companies to take on one or ...
Put your business on the road to success with a joint venture agreement
Using a joint venture agreement. When you set up a joint venture, it's a good idea to put your plan in writing. The agreement outlines the complete terms of your plan to work together. This detailed contract discusses: The term of the agreement. The duties of each member. The name and purpose of the venture.
Capturing and Optimizing Joint Venture Value
Begin the discussions with an honest list of the objectives that are most important to your business. From there, design a joint business plan for the next three to five years that includes key investment and return expectations. This will help establish a solid foundation for the early years of the partnership. Establish a clear governance ...
10 Joint-Venture Examples You Should Know About
6. Geely and Volvo. Type: Functional-based joint-venture. LYNK & CO is an automotive joint-venture between Geely Auto Group and Volvo Car Group, aimed at challenging the established automotive industry by catering to the needs of a new generation of connected consumers.
Joint Venture (JV): Definition, Why Companies Consider JVs?
A joint venture is a business arrangement wherein companies pool resources and create a new legal entity with specific strategic goals. The organizations which create the new entity under the terms of the joint venture will share ownership, risks and returns, and governance of the entity. The strategic motives for creating joint ventures can ...
Negotiating a better joint venture
One global energy company learned this lesson the hard way when its partners in an existing JV objected that a new venture completed by the energy company would, over time, hurt the existing JV's business prospects. As a result, a foreign court ordered the energy company to pay extensive damages for an initiative that never even launched.
How to negotiate successful joint ventures and alliances
Welcome to Inside the Strategy Room. In this episode we talk to two of our experts about ways to make joint ventures and alliances more successful. The better companies do at managing such increasingly complex partnerships, the more likely they are to emerge as partners of choice for tackling new markets or channels.
Joint venture process
A joint venture is an alliance of two or more parties to share markets, intellectual property, assets, and profits. A joint venture differs from a merger in the sense that there is no transfer of ownership in the deal. Each Joint Venture Partner usually brings in a complementary strength. A common use of JVs is to partner up with a local ...
Key Clauses in Joint Venture Contracts
Joint Decision-Making Process. In a joint venture, a well-defined decision-making process is crucial to prevent deadlock and facilitate timely progress, as it outlines the procedures for making key decisions and resolving disputes that may arise. A joint decision-making process typically involves a combination of consensus building and veto power.
Legal Steps for Structuring Startup Joint Ventures
By integrating these findings into a cohesive business strategy, joint venture partners can establish objectives that are aligned with their shared vision. This, in turn, enables the development of a detailed plan, outlining specific goals, timelines, and key performance indicators. By doing so, joint venture partners can guarantee a united ...
Lockheed-Raytheon JV secures $1.3 billion Javelin missile ...
Since then, the joint venture has been ramping up Javelin production, with plans to reach an annual manufacturing capacity of around 4,000 missiles by late 2026. The new contract includes the ...
Legal Issues in Joint Ventures
Structuring the Joint Venture Agreement. A well-structured joint venture agreement is pivotal to establish a clear understanding of the parties' rights and obligations, allocate risks and responsibilities, and provide a framework for decision-making and dispute resolution.
GM, Samsung announce $3.5 billion plan to build Indiana EV battery plant
America's largest automaker, General Motors, and Samsung SDI announced that they have finalized a $3.5 billion deal on Wednesday, Aug. 28, to build an electric vehicle battery plant in New Carlisle, Indiana. Among the products that will be at the plant beginning in 2027 are prismatic cells.
Follow the data to make better business decisions
For business operators, Ralston says these geographic and life-stage variances underscore the importance of looking beyond national averages when making operational and capital allocation decisions. "While there have historically always been spending differences between states, the divergence has become far more exaggerated since COVID hit ...
Joint Venture deal to develop 750 homes on site of former Police HQ
The site of the former GM Police HQ in Stretford will now support around 750 new homes following the signing of a Joint Venture Agreement between Far East Consortium (FEC), Trafford Council and ...

How to Write a Joint Venture Business Plan

Steps to Write a Joint Venture Business Plan

Step 1: Write a Detailed Company Profile

Step 2: Spell Out your Marketing Strategies

Step 3: Input your Financial Projections

Step 4: Your Executive Summary

Important Clauses to Include in a Joint Venture Business Plan

Definitions

Parties to the Joint Venture

Nature of the Relationship

Business Objectives and Purpose of the Joint Venture

The Structure of the Joint Venture

Parties’ Contributions

Distribution of Shares

Rights and Obligations of the Parties

Representation and Warranties

Indemnity Clause

Dispute Resolution

Non-compete clause

Confidentiality

Force Majeure

Termination

Exit Mechanism

Deadlock Resolution

Financial and Administrative Record Keeping

Intellectual Property

More on Business Plan Tips

What Is a Joint Business Plan (JBP)? Benefits & Best Practices

What Is a Joint Business Plan?

What Is the Purpose of a Joint Business Plan?

How Does a Joint Business Plan Work?

Benefits of Joint Business Planning

Joint Business Planning Best Practices

1. Align Internally First

2. Create the Plan Together

3. Set Specific Goals

4. Assign a Metric to Each Goal

5. Communicate Responsibility and Accountability

6. Include Risks and Solutions

7. Constantly Evaluate the Relationship

Joint Business Plans at Walmart

About the Author

Related Content

5 Essential Excel Skills for Walmart Luminate™ Users

Suppliers: Adjust Based on 2024 BTS Sales

Walmart DSS Sunsets: How to Prepare for Luminate™

A Guide to Joint Business Planning Best Practices

The Importance of Joint Business Planning in Today’s Market

Competitive Advantage and Shared Vision

Mutual Growth Opportunities and Win-Win Strategy

Core Elements of Effective Joint Business Planning

Aligning Business Strategies for Success

Shared Shopper and Marketplace Insights

Collaborative Working Relationships

How to Create an Effective Joint Business Plan

1. Setting Joint Objectives and Account Management

2. Resource Allocation and Shared Resources

3. Formal Contracts and Legal Aspects

Best Practices for Joint Business Planning Execution

1. Performance Metrics and KPIs

2. Monitoring and Accountability

3. Value Chain Analysis and Multi-functional Execution

Creating Value Through Customer Focus

How to Create Value for Customers Through Joint Business Planning

Consumer Sales and Customer Experience

Frequently Asked Questions (FAQs)

How do you resolve conflicts during the Joint Business Planning process?

What role do executive sales leaders play in Joint Business Planning?

How often should a Joint Business Plan be reviewed and updated?

Are there any software tools that can facilitate Joint Business Planning?

Leave a Comment Cancel Reply

Related Content to Business Valuation

Chemical Inventory Management Software: Maximize Safety

RFIC: What is a radio frequency integrated circuit and how does it work?

Understanding ROU Asset Tax Treatment Essentials

What is Lease Term 1 Mos? Understanding Short-Term Leases

Walmart RFID Mandate: What You Need to Know

Leading RFID Label Manufacturers | Custom Solutions

RFID Integration: Elevate Your Inventory Management

Maryland Warehouse Inventory Services | Optimize Management