Chapter 8: Unleashing the JV Force
Topics Covered
- Joint Ventures
- GPS Paradigm in JVs
- Classic JVs
Joint Ventures
JV’s have been in existence since time immemorial. Literally, thousands of JVs or alliances must have been formed in the past 100 years and equally must have got even wound up. In the United States, their use began with the railroads in the late 1800s. Throughout the middle part of the twentieth century, TVs dominated the manufacturing sector. By the late 1980s, they increasingly appeared on the service industry horizon even as businesses looked for greener pastures for expansion and diversification into new areas.
JVs became even more common in the late 20th and early 21″ centuries when many industrially efficient nations saw many public and private JVs to construct hospitals, mass transit systems, and technology-driven projects. Even in developing countries, JVS spearheaded by foreign governments and non-governmental organizations undertook many developmental initiatives of the public good.
JVs are often formed between public sector and private sector firms. Better known as public-private partnership JVs, their purposes can be varied whether infrastructure projects, scientific research, health initiatives, or community development. These arrangements typically employ private money towards the fulfillment of public goals. Many are set up for new ambitions, for managing risk in uncertain markets, sharing the cost of large-scale capital investments, and injecting newfound entrepreneurial spirit into maturing businesses.
Joint ventures have the potential to restrict competition, especially when they are formed by businesses that are otherwise competitors or potential competitors. They can also reduce the entry of other players into a given market. This is precisely why regulators regularly evaluate joint ventures for violations of antitrust law.
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