What is it? Joint Venture or Partnership?

Joint Venture V/S Partnership

Joint ventures and Partnerships are typical legal arrangements used by business owners to pool their resources, abilities, and skills with those of another person or company.

To make it easy, let’s say Joint Venture is when two or more persons do business together.

Here comes the question that isn’t this the definition of Partnership? Two or more persons doing business together? So why are we calling it Joint Venture now and not Partnership? Why did we change its name? Isn’t there going to be a partnership between those businessmen?

Obviously, there is going to be a “partnership “but there is a slight difference between both of them.

Partnership is long lasting and for a longer duration of time whereas “Joint Venture is a Partnership for a short period of time and is temporary.”

Frequently, business owners and layman confuse between the two phrases when defining the association, supposing that they are “interchangeable “. Although there are many parallels between these legal arrangements, there are major variations that business owners should be aware of when attempting to form an alliance with another company. By weighing the benefits and drawbacks of each agreement ahead of time, organisations will be better able to make the best strategic option to assist them reach their objectives.

Let’s understand this with the help of an example-

There is a tender notice to construct a hospital. And whoever will be able to invest 20 crore rupees of tender money, they will only get the tender for hospital.

Now, there is builder “A” who have business capital of 10 crore rupees and builder “B” who also have only 10 crore rupees, but in order to get the tender they should have 20 crore rupees to invest.

Now, what is the solution?  “A” comes up with the solution and asks “B” that if he is willing to put his business capital with him and jointly present them for tender.  “B” agrees and together they will be able to invest 20 crore rupees of tender money.

This partnership will only last till the time the construction of hospital is going on. They will divide their profits and losses in half. As soon as construction is completed so will be their partnership.

This is known as Joint Venture.  A partnership for short period of time and for specific tasks is Joint Venture.

What does Partnership and Joint Venture mean?

It helps to start with definitions and a simple example to properly distinguish between a joint venture and a partnership.

Partnership:  A partnership is a voluntary association of two or more persons who own and operate a business for profit together. For example, law firm partners who collaborate to provide legal services for a profit.

Example-

  • Red Bull & GoPro
  • Sherwin-Williams & Pottery Barn.
  • West Elm & Casper
  • Dr. Pepper & Bonne Belle.

Joint Venture: A joint venture is a business venture in which two or more persons work together on a single project. The formation of a joint venture is a fact-based decision based on the circumstances. An express or implied agreement, a common objective that the group plans to carry out, shared profits and losses, and each member’s equal voice in project control are all required factors.

Example-

1. Hindustan Aeronautics Ltd

2. Vistara

3. Tata Global Beverages

4. Bharti-AXA General Insurance Co Ltd

5. Fratelli Wines

6. Mahindra-Renault Ltd

 7. Sony-Ericsson, for example, was a mobile phone joint venture between the Japanese consumer electronics business Sony Corporation and the Swedish telecoms corporation Ericsson.

INFERENCE

Joint Ventures and Partnerships are two well-known business structures. Many large corporations organise a joint venture for a specific purpose, and after that objective is fulfilled, the venture ceases to exist. Partnerships remain longer because they are not founded with the idea of completing a specific task; rather, the partnership’s sole purpose is to conduct business and share profits and losses.

When it comes to earnings, profits for joint ventures are calculated at the end of the venture, but profits for partnerships are determined annually.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

Do follow me on FacebookTwitter  Youtube and Instagram.

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at adv.aishwaryasandeep@gmail.com

We also have a Facebook Group Restarter Moms for Mothers or Women who would like to rejoin their careers post a career break or women who are enterpreneurs.

We are also running a series Inspirational Women from January 2021 to March 31,2021, featuring around 1000 stories about Indian Women, who changed the world. #choosetochallenge

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.