What are the benefits of entering into joint ventures ?
Or
Lately, many companies like Mittal Atcelt and Ford-Tata have formed or are trying to form joint ventures. Explain any five benefits that they will or are deriving out of forming a joint venture.
Benefits of joint ventures are :
1.Reduces competition : When two companies join together, it results in reducing the competition as instead of wasting resources in competition they will strengthen their organisation.
2.Reduces risk : High risk involved in new and innovative ventures can be reduced when two companies join together to share the risk.
3.Advanced technology : By joining hands with foreign companies, Indian companies can get the benefit of advanced technology.
4.Large capital : In joint ventures, two companies together contribute capital. As a result, large capital can be arranged without much difficulty.
5.Reduction in cost: When two firms join together, they can operate on a large scale and get the benefit of economies of scale hence reduces cost of production and marketing.