joint venture marketing
Some joint ventures are relatively simple, with two companies coming together in a rather informal manner to pump up their marketing and build a customer base. Other joint ventures are significantly more complex, with more businesses involved in a partnership that becomes a separate entity in its own right.
If you are heading for the latter model of a joint venture, it is important to understand the structure of these joint venture groups to achieve the greatest odds of success. We’ll show you how to structure a joint venture group so everyone benefits from the partnership.
Purpose of the Joint Venture
When more businesses are becoming involved in a joint venture, the ultimate purpose of the arrangement becomes that much more significant. In these group situations, marketing is rarely the primary goal of the joint venture. These entities might be formed for the purpose of production expansion, research and development or risk-sharing for an investment strategy. It is important that everyone onboard the joint venture understands the ultimate goal of the arrangement before signing on the dotted line.
Putting the Legal Ducks in a Row
The purpose of the joint venture will determine in part what type of legal documentation is required to make the joint venture official. When you know the goal of the joint venture, select a lawyer who specializes in those types of arrangements to draw up your contract for you. This ensures all the legal loopholes are covered in the initial agreement, and that everyone’s rights and property are equally protected.
Lawyers will help you navigate the complex road of tax reporting, profit sharing and patent protection. If the joint venture will involve companies from different countries, a lawyer will be able to advise all the parties on the various trade and labor laws of the countries included.
Establishing a Hierarchy
Joint ventures of this size usually need their own governance structure to oversee the partnership. First, a governing body that consists of representatives from each aspect of the joint venture should be created. This body will protect the interests of all involved businesses, since every company will have at least one member to represent them.
There also needs to be an operational management team that will report to the governing body and oversee the daily workings of the joint venture. Finally, a financial team should be put in place to handle the accounting and tax reporting specific to the joint venture.
What about Disputes?
The more partners there are in a joint venture, the more likely the occasional dispute will arise. Every joint venture should have a dispute resolution in process before the first conflict comes up. This process may be incorporated into the joint venture contract or established as a policy for the governing body of the partnership.
Joint ventures can be as simple or complex as you want to make them, but more sophisticated joint venture models require more research and time to construct properly. By weighing all of these factors with equal care, all of the members of the joint venture can rest assured the joint venture they create will equally protect and benefit every member of the partnership.
christian fea is CEO of Synertegic, Inc. A joint venture marketing firm. He exemplifies how to profit from Joint Venture relationships by creating profit centers with minimal risk and maximum profitability.
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