Creation of joint ventures: examples in real business

Contents:

• In what form are joint ventures created?
• Examples of joint ventures
• Notable joint ventures

Joint ventures (JV) are a special form of ownership involving the creation of a common company by participants from two countries. Relationships are built on the basis of a unified management of property and other assets. The theory distinguishes two types of SP:

• Contractual. Created without registration of a new legal entity. The work takes place within the framework of a joint activity agreement. As a rule, we are talking about partnerships.  
• Corporate. They imply the creation of another legal entity. They occur in practice most often.

In general, joint ventures are created to achieve more profitable results from joint ownership of assets.

In what form are joint ventures created?

Often such companies are opened in the form of a joint-stock company (JSC) or a limited liability company (LLC). Certain advantages make LLC popular. In general, these two forms of business organization have a number of positive characteristics in relation to the joint venture:

• More flexible and open corporate governance;
• The ability to sell/transfer a share or shares primarily to other participants.
• The ability to freely dispose of assets – shares and shares.

As we noted earlier, the LLC has an advantage over the JSC due to the lack of activity on the issue of shares and the right to disclose less information. At the same time, data on the owners of the LLC are publicly available.

The main document confirming the powers of the joint venture is a corporate agreement. It reflects the main provisions that formed the legal basis for the activities of a particular enterprise.

As a rule, the management of a joint venture in the territory of the Russian Federation is handled by either the General director or the board of directors. In the latter case, all important decisions are made at the general meeting.

Examples of joint ventures

The creation of joint ventures in the world practice is an ordinary process for the business environment. Each country practices the creation of various types of joint ventures based on the needs of the market. For example, in Germany and France, these are companies related to the automotive industry, and the United States – the mining industry.

There are more than a hundred successful joint ventures, but some of the most iconic in the world are:

• ARCOR. One of the world’s first manufacturers of sweets and other confectionery products hails from Latin America. The company operates in Buenos Aires and has 13,000 employees. The products are exported to more than 100 world countries.  
• Coca-Cola. The world leader in the production of carbonated beverages, with many factories around the world.
• * Procter & Gamble. One of the leaders in the production of cosmetics and household chemicals. Has many partner companies around the world.

Notable joint ventures

The most popular joint ventures work in one way or another in the real sector of the economy. This is due to the formation of strategic alliances of corporations and firms to enter the international market. This can be attributed to the union of such companies:

• * General Motors and Toyota.
• * General Electric and Westinghouse.
• * MS Donald and a number of global companies working in the field of catering.
• Hertz and Ford.

Most of these enterprises initially strengthened their influence within the registrar country, and then, through the creation of the first joint ventures, successfully entered the world market.

As for Russia, joint ventures are formed in various fields, mainly working in the chemical, extractive industries, food production and others.