I have already spent significant time discussing the similarities of business ventures and partnerships and relationships between people. Both are two entities coming together to either form one body or to work together and collaborate. Both require trust, communication and information. And both require heavy consideration and evaluation. In this article I will specifically examine joint ventures, defining what they are, giving some examples, and then stating once again the need for investigation before committing.
Joint Ventures Definition
The term joint venture refers more to the purpose of a business event instead of the actual type of event. Thus, a joint venture occurs when two businesses come together – whether in the form of a collaboration, partnership or merger between two companies – for the benefit of both. Both parties agree to combine forces and give of their individual resources (equity, assets, workforce, etc.) and then to share in revenue, expenses and control. A venture could be simply for one specific project, or it could span for a year, two years and up to an entire business relationship. Reasons to build joint ventures include: building on a company’s strengths; improving access to financial resources; spreading costs and sharing risks; increasing exposure and access to new technologies and customers.
Examples
Joint ventures are seen often in the oil and gas industries, with companies like BP and Shell combining for a time into Shell-Mex and BP, as well as the more recent merger of Texaco and Shell known as Equilon. They are also common in the global economy, with almost ¾ of joint ventures occurring among international companies. In fact, some countries, like the People’s Republic of China and India, require that, in order to sell within their marketplace, a foreign company must join in a venture with a domestic company. This, naturally, increases the number of joint ventures yearly, as more and more companies seek to sell both in domestic and foreign markets. Examples of international joint ventures include Sony Ericsson, NUMMI (GM and Toyota) and Fujitsu Siemens Computers.
Importance of Investigation
Though the number of joint ventures increases every year, studies show that between 30 and 60 percent of JVs breakdown and fail, with 60 percent of JVs either never getting off the ground or failing less than 5 years in. There are many causes, many factors that play in the failures of joint ventures; yet, one must assume that part of the problem is lack of information, communication and trust among the partners. Not enough private investigation took place beforehand. One partner might have been mislead with false claims or false information from the other, which could have easily been countered and avoided if the first company verified the information for themselves through investigative work.
A good private investigator will be able to uncover and retrieve the information that a company seeks, and will be able to verify or falsify any information given. Ultimately, a private investigator can help support a choice in partner or can steer a company clear. With private investigation before committing to a joint venture, the number of failures will go down.
