Joint Venture

A joint venture is a business arrangement in which two or more parties agree to collaborate and share resources in order to pursue a common goal.

Joint ventures are an arrangement between two or more parties (companies or individuals) wherein they share the risks and rewards of running a business together. They differ from other business arrangements because all parties involved in the venture are expected to work toward a common goal, and any profits earned by the venture are generally shared among the parties in an agreed-upon manner.

The primary purpose of establishing a joint venture is to execute a large-scale project by combining resources and capabilities of the parties involved in the venture. It also allows each party to benefit from the unique capabilities of the other partners and gain access to their networks.

Additionally, joint ventures may allow companies to partner on something new or innovative, while avoiding the complexity and cost of traditional corporate mergers and acquisitions.

A great example of a joint venture would be the collaboration between Amazon and Apple in 2019 where they announced that customers would be able to buy and stream Apple Music from Amazon's Echo devices. This strategic move allowed both companies access to new markets and customer bases that were not previously accessible to them, as well as allowing their customers access to the products and services of the other. This expansion into each of their existing and new markets allowed them to benefit from each other's capabilities, ultimately leading to an expanded customer reach and customer satisfaction.