What are the options available for growth
A joint venture is when a separate company is formed, in which every member holds an equity stake. Area Energy is a joint venture between Exxon and Royal Dutch Shell.
-Synergy for example expertise of different parties
-Can reduces financial outlay for both parties
-Can reduce risk for instance can strengthen and fortify position for both parties
-Good entry route for overseas development for instance overcome government barriers about foreign competition.
- Legal complexities and contractual disputes
- Collaboration can often be overridden by 'self-interest'
- Incompatibility of systems and culture to effectively work together
- Problem shared often means profits are shared