what is a joint venture jv 
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 sydney burns investopediaunderstanding 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 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 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 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 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