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International Joint venture

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International Joint venture
International Joint Venture

International Joint Ventures (IJVs) are becoming increasingly popular in the business world as they aid companies to form strategic alliances. These strategic alliances allow companies to gain competitive advantage through access to a partner’s resources, including markets, technologies, capital and people. International Joint Ventures are viewed as a practical vehicle for knowledge transfer, such as technology transfer, from multinational expertise to local companies, and such knowledge transfer can contribute to the performance improvement of local companies. Within IJV’s one or more of the parties is located where the operations of the IJV take place and also involve a local and foreign company. Basic Elements of an IJV
Contractual Agreement. IJVs are established by express contracts that consist of one or more agreements involving two or more individuals or organizations and that are entered into for a specific business purpose.

Specific Limited Purpose and Duration. IJVs are formed for a specific business objective and can have a limited life span or be long-term. IJVs are frequently established for a limited duration because (a) the complementary activities involve a limited amount of assets; (b) the complementary assets have only a limited service life; and/or (c) the complementary production activities will be of only limited efficacy.

Joint Property Interest. Each IJV participant contributes property, cash, or other assets and organizational capital for the pursuit of a common and specific business purpose. Thus, an IJV is not merely a contractual relationship, but rather the contributions are made to a newly formed business enterprise, usually a corporation, limited liability company, or partnership. As such, the participants acquire a joint property interest in the assets and subject matter of the IJV.

Reasons for Forming a Joint Venture

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