Assumption: Large infrastructural works should only be undertaken by large multinational companies.

Our message to SMEs: Definitely NOT.

Assumption: Joint ventures are the easiest way to expand your company's capabilities.

Our message to SMEs: No, it is not the easiest way, but we will guide your company throughout the entire process by solving all possible issues, thus facilitating a safer way of doing business.

Every country in the world today suffers from either a lack of critical infrastructure or obsolescence of existing infrastructure, or both. Despite the fact that some SMEs have a significant market share, it is also true that in several cases government requirements to undertake such large projects are prohibitive. SMEs might be lacking the necessary track record, similar or higher volumetric experience, financial strength, insurances, and guarantees that the large multinational companies have.

Solving these problems for SMEs is where Consultia comes in.
At Consultia we have vast professional experience over many years, we've interacted with thousands of companies, with executives, governments and everything in between, and we are able to share our network with our customers.

Partnering with someone is difficult and it works best when both parties share the same values and a strict code of ethics. At the top of the list is trust, no dialogue starts without this key asset, trust, and that is what we already have in our relationships with so many large companies. We always met them when we were on the other side of the counter, even in the middle of tough discussions but always in a high professional level, and that is why we now have the opportunity to negotiate new business with them. We truly believe that it is due to our strict code of ethics that we are able to offer such a reliable network to our customers today.

For some time believed to be inferior to Wholly Foreign-Owned Enterprises, Joint Ventures have become a popular vehicle for foreign market servicing. Although there are various proponents of the joint venture strategy as a means of enabling SMEs with limited productive resources and/or market knowledge to enter international markets, relatively few have focused on the actual joint venturing activities of SMEs.

We show how productivity differences between foreign and indigenous firms affect the choice of the foreign market entry strategy. We identify the conditions necessary for the adoption of a particular strategy depending on the competing firms' productivity differences as well as each strategy's cost. In particular, we study tradeoffs between exporting and JV as well as between JV and WOS that were neglected in the firm heterogeneity literature. We find that high productivity differences led the foreign firm to enter host markets via WOS or exporting monopoly, while in the case of smaller productivity differences they entered via different types of JV. The share in joint venture depended positively on the productivity difference and negatively on trade and investment costs.

A joint venture involves two or more businesses pooling their resources and expertise to achieve a particular goal. The risks and rewards of the enterprise are also shared.

The reasons behind forming a joint venture include business expansion, development of new products or moving into new markets, particularly overseas.

Types of Joint Venture
How you set up a joint venture depends on what you are trying to achieve.

One option is to agree to co-operate with another business in a limited and specific way. For example, a small business with an exciting new product might want to sell it through a larger company's distribution network. The two partners could agree to a contract setting out the terms and conditions of how this would work.

Alternatively, you might want to set up a separate joint venture business, possibly a new company, to handle a particular contract. A joint venture company like this can be a very flexible option. The partners each own shares in the company and agree on how it should be managed.

In some circumstances, other options may work better than a business corporation. For example, you could form a business partnership. You might even decide to completely merge your two businesses.

To help you decide what form of joint venture is best for you, you should consider whether you want to be involved in managing it. You should also think about what might happen if the venture goes wrong and how much risk you are prepared to accept.

It's worth taking legal advice to help identify your best option. The way you set up your joint venture affects how you run it and how any profits are shared and taxed. It also affects your liability if the venture goes wrong. You need a clear legal agreement setting out how the joint venture will work and how any income will be shared. See the page in this guide on how to create a joint venture agreement.

Joint Venture– Benefits and Risks
Businesses of any size can use joint ventures to strengthen long-term relationships or to collaborate on short-term projects.

A joint venture can also be very flexible. For example, a joint venture can have a limited life span and only cover part of what you do, thus limiting the commitment for both parties and the business' exposure.

Joint ventures are especially popular with businesses in the transport and travel industries that operate in different countries.

The risks of joint ventures

Success in a joint venture depends on thorough research and analysis of aims and objectives. This should be followed up with effective communication of the business plan to everyone involved.

Assess Your Readiness Fora Joint Venture
Setting up a joint venture can represent a major change to your business. However beneficial it may be to your potential for growth, it needs to fit with your overall business strategy.

It's important to review your business strategy before committing to a joint venture. This should help you define what you can realistically expect. In fact, you might decide that there are better ways to achieve your business aims. See our guide on how to assess your options for growth.

You may also want to look at what other businesses are doing, particularly those that operate in similar markets to yours. Seeing how they use joint ventures could help you choose the best approach for your business. At the same time, you could try to identify the skills they apply to partner successfully.

You can benefit from examining your own business. Be realistic about your strengths and weaknesses - consider performing a SWOT (strengths, weaknesses, opportunities and threats) analysis to discover whether the two businesses are a good fit. You will almost certainly want to find a joint venture partner that complements your own business' strengths and weaknesses.

You should take into account your employees' attitudes and bear in mind that people can feel threatened by a joint venture. It can also be difficult to build effective working relationships if your partner has a different way of doing things.

If you do decide to form a joint venture, it may well help your business to grow faster, increase productivity and generate greater profits. Joint ventures often enable growth without having to borrow funds or look for outside investors. You may also be able to use your joint venture partner's customer database to market your product, or offer your partner's services and products to your existing customers. Joint venture partners also benefit from being able to join forces in purchasing, research and development.

Plan Your Joint Venture Relationship
Before starting a joint venture, the parties involved need to understand what they each want from the relationship.

Smaller businesses often want to access a larger partner's resources, such as a strong distribution network, specialist employees and financial resources. The larger business might benefit from working with a more flexible, innovative partner, or simply from access to new products or intellectual property.

Similarly, you might decide to build a stronger relationship with a supplier. You might benefit from their knowledge of new technologies and get a better quality of service. The supplier's aim might be to strengthen their business from a guaranteed volume of sales to you.

The objectives on which you agree should be turned into a working relationship that encourages teamwork and trust. See the page in this guide on how to make your joint venture relationship work.

Choosing the Right Joint Venture Partner
The ideal partner in a joint venture is one that has resources, skills and assets that complement your own. The joint venture has to work contractually, but there should also be a good fit between the cultures of the two organizations.

A good starting place is to assess the suitability of existing customers and suppliers with whom you already have a long-term relationship. You could also think about your competitors or other professional associates. Broadly, you need to consider the following:

If you opt to assess a new potential partner, you need to carry out some basic checks:

Before you consider signing up to a joint venture, it's important to protect your own interests. This should include drawing up legal documents to protect your own trade secrets and finding out whether your potential partner holds intellectual property rights agreements. Also, it's worth checking to see whether they have other agreements in place, either with their employees or consultants.

Create a Joint Venture Agreement
When you decide to create a joint venture, you should set out the terms and conditions in a written agreement. This will help prevent any misunderstandings once the joint venture is up and running.

Make Your Joint Venture Relationship Work
A clear agreement is an essential part of building a good relationship. Consider these ideas:

Get your relationship off to a good start. For example, you might include a project that you know will be a success so that the team working on the joint venture can start well, even if you could have completed it on your own.

Communication is a key part of building the relationship. It's usually a good idea to arrange regular, face-to-face meetings for all the key people involved in the joint venture.

Sharing information openly, particularly on financial matters, also helps avoid partners becoming suspicious of each other. The more trust there is, the better the chances that your relationship will work.

It's essential that everyone knows what you are trying to achieve and works towards the same goals. Establishing clear performance indicators lets you measure performance and can give you early warning of potential problems.

At the same time, you should aim for a flexible relationship. Regularly review how you could improve the way things work and whether you should change your objectives.

Even in the best relationship, you'll almost certainly have problems from time to time. Approach any disagreement positively, looking for "win-win" solutions rather than trying to score points off each other. Your original joint venture agreement should set out agreed dispute resolution procedures in case you are unable to resolve your differences yourselves.

For more information, contact us: info@consultiausa.com

Ending a Joint Venture
Your business, your partner's business and your markets all change over time. A joint venture may be able to adapt to the new circumstances, but sooner or later most partnering arrangements come to an end. If your joint venture was set up to handle a particular project, it will naturally come to an end when the project is finished.

Ending a joint venture is always easiest if you have addressed the key issues in advance. A contractual joint venture, such as a distribution agreement, can include termination conditions. For example, you might each be allowed to give three months' notice to end the agreement. Alternatively, if you have set up a joint venture company, one option can be for one partner to buy the other out. The original agreement may typically require one partner to buy out the other.

Even with a well-planned agreement, there are still likely to be issues to resolve. For example, you might need to agree who will continue to deal with a particular customer. Good planning and a positive approach to negotiation will help you arrange a friendly separation. This improves the chances that you can continue to trust each other and work together afterwards. It can also raise your profile in the business community as a reliable and productive partner.