Show One of the forms of strategic alliance is a joint venture, which can be understood as the temporary partnership, in which two or more entities conjoin to undertake a specific venture. The basic difference between the joint venture and strategic alliance lies in their nature and relationship between the two entities. In the given article, we’ve presented you all the substantial points of distinction amidst these two, so take a read. Content: Joint Venture Vs Strategic Alliance
Comparison Chart
Definition of Joint VentureJoint Venture may be defined as a combination of two or more firms, which set up a separate legal entity, which indicates the capital and interests of the two parties. In finer terms, when two or more firms, invest funds for forming a jointly owned new company is known as a joint venture. The parties to the joint venture, contribute their resources, competencies, skills, technology, in a definite proportion and share the revenues, expenses and company’s control. The four basic reasons for entering into such a strategic alliance is:
A joint venture may result in pooling of resources, massive leverage, lower risk, optimum utilisation of resources, high profits, etc. Definition of Strategic AllianceStrategic Alliance is an arrangement between two or more firms to carry out a number of objectives agreed upon by the entities or to fulfil a critical business requirement while operating as separate organisations. In finer terms, a strategic alliance is a relation that exists amidst two firms, to do business together, which is more than a regular firm to firm dealing, but less than a merger or complete partnership. The entities involving in the alliance may pool their resources such as products, knowledge, expertise, goodwill, capital, distribution channels and so forth. The entities may maintain their autonomy, while they achieve new opportunity. The alliance aims at gaining synergy, wherein each party expects that the strength of the alliance will surpass individual efforts. It encompasses transfer of technical know-how, economic specialisation, divide rewards, risk and expense sharing.
The points given below explain the difference between joint venture and strategic alliance
ConclusionNowadays, most of the companies are turning towards the strategic alliance, with the aim of coping with uncertainty and risk, as well as to approach a gamut of competencies, market and technology. On the other hand, joint ventures can access the knowledge, assets and funds from all the firms to venture, so it is a blend of best features of those entities, without altering the parent enterprise.
Looking for Expert Opinion? Let us have a look at your work and suggest how to improve it! Get a Consultant
|