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The necessity for both partners to accept
that their gains will flow only from the gains of the joint venture.
The joint venture should not be a vehicle by which either Partner
harvests profits for itself - by selling agency arrangements or preferential
price supplies or by off-loading unrelated expenses/ by charging corporate
overheads. |
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Both partners should appreciate the need
for the joint venture. At any time that one partner feels that
the other is superfluous, then the end is in sight. There should be
free and transparent flow of information on product developments,
access to technology, technical and marketing support and all managerial
and business support to the joint venture, even if it were only a
small business. |
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The partners should clearly agree on the
way the joint venture will be managed. The Primary operational
management should be with one of the partners, who will be accountable
to the other. |
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It is important that both partners work
towards a system based on trust and transparency. Obviously, when
the joint venture is set up, a legal document replete with do's and
dont's has to be drawn up, but if that document has to be referred
to frequently to decide who can do what, then it means that there
is something wrong. |
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For the on-going operations there should be
appropriate interaction at different functional levels. For managerial
decision-making on important issues that call for the involvement
of both partners, there should be a clearly defined high level contact
at either end.The important thing here is the level of comfort
on such 'important' consultations. |
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To make for the long term success of the
joint venture, it is also important that both partners are equally
able to service its growing need for capital as the business expands.......support
the joint venture with capital and other financial and managerial
resources and should also clearly agree to share the responsibility
for losses. |
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