Why might a company consider a joint venture?

A company might consider a joint venture primarily to share resources and reduce costs. In a joint venture, two or more parties come together to create a new entity, pooling their resources—such as capital, technology, or expertise—to achieve a common goal. This collaboration allows companies to leverage each other's strengths, leading to decreased expenses related to research, development, production, or market entry. By sharing financial and operational burdens, companies can take advantage of economies of scale and improve their competitiveness in the market.

Additionally, a joint venture can provide access to new markets or customer bases and enhance innovation through combined knowledge and experience. This approach is especially beneficial for companies looking to expand but wanting to mitigate risks associated with entering unfamiliar or challenging environments. Through collaboration, they can achieve objectives that might be difficult to reach independently.