Difference Between Joint Venture vs Strategic Alliance
A joint venture is an agreement between two or more parties who agree to pool their resources for the accomplishment of certain activity or task. A joint venture is an agreement between two parties for certain types of work and for a certain period of time. A strategic alliance where two different parties come together and share their resources to undertake a specific, mutually desirable project. In a strategic alliance, both parties come with resources and from a new company. In strategic business both the company maintains its autonomy while gaining a new opportunity.
In a joint venture both the parties come together for a specific purpose or for the new project or any other new business. In joint each party is responsible for profit & losses and the cost associated with it. The strategic alliance allows two organizations, individuals, other entities to work toward the common or correlating goal. A strategic alliance is for benefit of all the parties involved and it can be for the short term and the long term both. The agreement in a strategic alliance can be formal or informal but each party’s responsibilities must be clear. So both joint venture vs strategic alliance term has its own importance in the field of business and big corporations. Joint ventures and strategic alliances have a vital role in the perspective of a business.
Head To Head Comparison Between Joint Venture vs Strategic Alliance (Infographics)
Below is the top 11 difference between Joint Venture vs Strategic Alliance
Key Differences Between Joint Venture vs Strategic Alliance
Both Joint Venture vs Strategic Alliance are popular choices in the market; let us discuss some of the major differences :
- A joint venture is basically contracting between two or more parties agree to pool their resource for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. On the other hand strategic alliance is an arrangement between two parties that have decided to share their resources to undertake a specific, mutually beneficial activity.
- In a joint venture, each of the participants is responsible for the profit, loss, and cost associated with the particular project for which they come together. A strategic alliance is less involved and less binding than a joint venture.
- A joint venture needs a contract agreement between two or more parties with all the descriptions about a share of profit and loss etc. On the other hand, there is May or may not be needed for a contract agreement between two or more parties. There is a risk of a trust relationship.
- Although they are having a partnership agreement which can be the colloquial sense of the word, the joint venture can take any legal structure. Corporation, partnership, limited liability is some of the function of a joint venture. Let’s talk about the strategic alliance in which two parties come together for achieving a common goal or objective. The strategic alliance allows the involved organizations to pursue the opportunity at a faster rate than if an organization functions alone.
- The joint venture allows to share resources of both parties for accomplishing the goal at a faster rate and move on to another contract, so in a joint venture, people come together for specific work, after completion of work they share the profit and finish the contract.
- A strategic alliance provides access to additional information, knowledge, and resources owned by the other party.
- In a joint venture contract, all thing is taken care of like how much each party contributes, a structure of JV. On the other hand, there is no existence for such a contract but they use the resources of either party for achieving a common goal.
Joint Venture vs Strategic Alliance Comparison Table
Below is the 11 topmost comparison between Joint Venture vs Strategic Alliance
| The Basic comparison | Joint Venture | Strategic Alliance |
| Meaning | A Joint venture is a form of business organization, set up by two or more business organizations for the purpose of carrying out a particular task or business activity. | A strategic alliance implies an agreement between two or more entities to work jointly with one another to increase the performance of both parties. |
| Independent organization | The independent entities come together in a joint venture. Do not operate as independent companies. | The two more companies come together in a strategic alliance, continue to operate as separate and independent companies. |
| Contract | In a joint venture, there is a need for a contract so a contract exists in a joint venture. | In a strategic alliance, there may or may not be a contract. |
| From of | Strategic alliance | Collaboration or corporate partnering |
| Separate legal entity | A joint venture is a separate legal entity | A strategic alliance is not a separate legal entity |
| Objective | In a joint venture is a risk is limited. | In a strategic alliance, the reward is maximized. |
| Management | In joint venture management is bilateral. | In a strategic alliance, management is delegated. |
| Resources | In joint venture resources include massive leverage, lower risk, and optimum utilization of resources. | In strategic alliance resources include product, knowledge, expertise, goodwill, capital, etc. |
| Part | The joint venture is a complicated part of a strategic alliance. | A strategic alliance is itself an alliance of two different businesses. |
| Duration | Joint venture duration is of the short term only maybe 1 year to 5 years. | Strategic alliance duration can be long term or short term depends upon the need of time. |
| Risk | In a joint venture, there is and limited risk to parties involved in the agreement. | In a strategic alliance, there are chances for higher risk due to the trust relationship between two parties, because there is may or may not contract. |
Conclusion
Joint venture vs strategic allegiance both term has a vital role in the field of business. The company that wants to do proper use of available resources can go for either of them. A strategic alliance needs a proper understanding between the parties involved. A joint venture has a legal contract so there is no misunderstanding issue. But both the term having importance in the field of business.
To complete work in less time, one can go for a joint venture because with the help of two parties the work can be completed even faster. For accomplishing a common goal of a company or business one can go for strategic allegiance as per the need. So both joint venture vs strategic alliance has their own importance as per the business need. If a company working on infrastructure then they may go for a joint venture.
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