Business organizations as you have studied earlier can be of various types private or government owned or global enterprises. Now, any business organization if it so desires can join hands with another business organization for mutual benefit. These two organizations may be private, government-owned or a foreign company. When two businesses agree to join together for a common purpose and mutual benefit, it gives rise to a joint venture. Businesses of any size can use joint ventures to strengthen long-term relationships or to collaborate on short term projects.
A joint venture can be flexible depending upon the party’s requirements. These need to be clearly stated in a joint venture agreement to avoid conflict at a later stage. A joint venture may also be the result of an agreement between two businesses in different countries. In this case, there are certain provisions provided by the governments of the two countries, which will have to be adhered to.