Strategic Alliance Vs Joint Venture: What’s The Difference( With Examples)

Strategic Alliance Vs Joint Venture: What’s The Difference( With Examples)

Written by

Ilyas Omari

When running a business, one of your main goals is to maximise your profits. Your business can expand in many different ways depending on the methods that you use. A great way to expand your business is by entering into a joint venture or a strategic alliance. 

A joint venture is when two or more businesses enter into a temporary alliance for a particular project. This alliance is generally set in stone by a specific contract or product that is mutually beneficial for both entities.

The term strategic alliance effectively refers to joint ventures; the terms are used interchangeably although strategic alliance may be more common in some consulting contexts.

Read along!

What is a Joint Venture?

A joint venture (JV) refers to a business arrangement that involves two or more parties that collaborate to carry out a specific project or task.

In joint ventures, the parties involved combine their resources. Joint ventures can be between the following:

Parties can enter into a joint venture agreement for either short- or long-term projects. Before you enter into a joint venture, you should be aware that everyone involved shares responsibility in regard to its costs, losses, and profits.  Nevertheless, joint ventures exist as a separate entity from the other business interests of their participants.

There are two types of joint ventures:

  • Incorporated Joint Venture: There is a separate legal personality. Therefore, it can enter into contracts and hold property under its own name.
  • Unincorporated Joint Venture: Parties hold specific shares in the joint venture depending on the agreement but do not hold a separate legal existence.

When parties enter into a joint venture, they usually sign a joint venture agreement. If you want to enter into a joint venture, you should use Lawpath’s joint venture agreement template to get started.

What are the advantages of a Joint Venture?

  • Joint ventures provide businesses with growth opportunities
  • Joint ventures are available to businesses of all sizes
  • Joint ventures are temporary agreements
  • Joint ventures provide businesses with the chance to work together and pool resources and expertise 
  • Joint ventures allow businesses to save money as funding and resources from several businesses will be utilized

What are the disadvantages of a Joint Venture?

  • There may be differences in the management styles of the parties involved, which could influence their expectations.
  • In order for a joint venture to succeed, due diligence must be performed beforehand, including feasibility studies, analysis, and research.
  • There could be unequal contributions that are made towards the joint venture that could lead to conflict between the parties involved
Most Popular Articles
You may also like
Recent Articles

Get the latest news

By clicking on 'Sign up to our newsletter' you are agreeing to the Lawpath Terms & Conditions

Share:

Register for our free live webinar today!

Company Setup 101

12:00pm AEDT
Wednesday 13th March 2023

By clicking on 'Register for webinar' you are agreeing to the Lawpath Terms & Conditions

You may also like

Learn about the types of liquidators, their role when winding up a company and how they impact creditors of a business.
An ACN and ABN are both important identifiers for your business, but are used depending on the type of business you have. Read more here.
What Is A Modern Slavery Policy? This article explores everything related to a Modern Slavery Policy; from key components to mistakes to avoid.

Thank you!

Your registration is confirmed. Keep an eye on your inbox for an email with details on how to watch the webinar.