A Joint Venture Company. What Is The Difference Between This Type Of Essay

A Joint Venture Company. What Is The Difference Between This Type Of Companies And Joint Stock Companies - Essay Example Since a joint venture partnership company is only formed for the short term, it terminates when the purpose of the joint venture partnership company is fulfilled. Similarly, each party also contributes in the assets to start up this joint venture. Most often, companies use joint ventures as a means of infiltrating foreign markets where they see potential and seek to do business in. for instance, if a foreign company is interested in doing business in China, they will form a joint venture company with a domestic Chinese firm which will help them gain access to the Chinese market due to the experience of the domestic company which already knew the ropes of how to function in the local Chinese market. Furthermore, when foreign companies enter into joint venture partnership companies with domestic firms of the market that they want to enter and operate in, they are not the only ones who benefit from the arrangement. Domestic firms are at an advantage in this arrangement too, they benefit from the new technological and business practices that the foreign firms bring to their market which serve as a learning experience for the domestic firms, consequently expanding their horizons. The foreign companies benefit from the value provided to them by the domestic company’s pre-existing relationship with the key players in the domestic government and industry. In more technical terms, a joint venture is treated like a regular partnership business for taxation purposes. However, joint ventures that transcend the boundaries of one country and go global are subject to international trade laws as well as the internal laws of the government of the economy they plan to penetrate. (Joint Venture, 2010). According to Folta (2012), who writes about foreign joint ventures in China, talks about how joint ventures a way for foreign firms to get past the barriers of the local Chinese market and reap the benefits of business operations in the local market. While talking about the advantages of joint venture partnership companies, the author mentions several factors that come into play. Other advantages of joint venture partnership companies include the fact thet they alleviate rich, grant access to domestic markets, are easier to manage and offer benefits in terms of tax advantages. â€Å"Partnerships, Joint Ventures and Strategic Alliances† talks about the effective connection among the three entities in business. As the authors point out, joint ventures have one of the highest crash rates in the world. (Glover and Wasserman, 2003). Yet, still joint ventures are becoming a growing trend in the modern globalized world. (Gutterman, 1997). As can be deduced, this paradigm shift has been due to the vast avenue of opportunities that globalization has opened up for businesses all over the world. They have now become interested in foreign economies as lucrative sources of investment and income for their business operations and joint venture companies provid e them an ideal platform to increase their reach into the market of a foreign economy they are interested in. Visconti (2003) in his book â€Å"Joint Venture† also talks about the topic along similar lines. Joint stock companies on the other hand are companies set up for business activity with the profit motive with profit divided among the owners who are the share holders in proportion to the amount of stock they own in the company. When owners invest in a joint stock company they receive shares in return for that investment. The business operatio