JOINT VENTURE

Between

Submitted By
Abhiraj Singh
B.F.T. 6

INTRODUCTION
www.inc.com/encyclopedia/joint-ventures.html
http://www.infoentrepreneurs.org/en/guides/joint-ventures-and-partnering/

What is a Joint Venture?

A joint venture (JV) is a business arrangement in which two or more parties agree
to pool their resources for the purpose of accomplishing a specific task. This task
can be a new project or any other business activity. In a joint venture (JV), each of
the participants is responsible for profits, losses and costs associated with it.
However, the venture is its own entity, separate and apart from the participants'
other business interests.
A joint venture is not a business organization in the sense of a proprietorship,
partnership, or corporation. It is an agreement between parties for a particular
purpose and usually a defined timeframe.
A joint venture could give you:
a)
b)
c)
d)

more resources
greater capacity
increased technical expertise
access to established markets and distribution channels

What are the Benefits and Risks of a Joint Venture?

A successful joint venture can offer:
1.
2.
3.
4.

access to new markets and distribution networks

increased capacity
sharing of risks and costs with a partner
access to greater resources, including specialised staff, technology and
finance

The risks of joint ventures

Partnering with another business can be complex. It takes time and effort to build
the right relationship. Problems are likely to arise if:

a) the objectives of the venture are not 100 per cent clear and communicated
to everyone involved
b) the partners have different objectives for the joint venture
c) there is an imbalance in levels of expertise, investment or assets brought into
the venture by the different partners
d) different cultures and management styles result in poor integration and
cooperation
e) the partners don't provide sufficient leadership and support in the early
stages

What are the legal aspect of a Joint Venture?

Joint ventures are governed entirely by the legal agreements that brought them
into existence.
Some joint venture partners may wish to formalize the venture by creating a new
joint venture company. Joint venture companies can be very flexible entities in
which partners each own shares and agree on how they will be managed. More
common are joint venture agreements that do not include the formation of a new
entity. Instead, the venture is operated through the existing legal status of the
venture partners, or co-venturers. Since the joint venture is not a legal entity, it
does not enter into contracts, hire employees, or have its own tax liabilities. These
activities and obligations are handled through the co-venturers directly and are
governed by contract law. Corporate law, partnership law, and the law of sole
proprietorship do not govern joint ventures. Finally, since the venture ends at the
conclusion of a specific project, there is no need to address issues of continuity of
life and free transferability, unless a joint venture company has been created.

A JV agreement should specifically detail the following:

Structure whether the JV will be a separate business entity in its own right,
or simply a short term project

Objective the purpose and goals of the JV

Confidentiality an agreement for the parties to protect any trade and

commercial secrets disclosed during the venture

Financial Contributions how much money each party will contribute to the
venture

Assets and Employees whether each party will contribute assets, and
whether they will assign employees to, or hire new employees for the venture

Intellectual Property Ownership which party will have ownership of any

intellectual property created by the venture

Management specific responsibilities of each party, and the procedures to

be followed in operations of the venture

Profits, Losses, and Liabilities specifics of how any profits and losses are to
be distributed or shared among the parties, as well as the assignment of
liabilities

Disputes specific instructions for the resolution of disputes that may arise
between the parties

Exit Strategy specific details on when and how the JV will end, including the
final distribution of assets and debts

CASE STUDY
https://en.wikipedia.org/wiki/Aston_Martin
http://www.leeco.com/
http://www.astonmartin.com/en/live/news/2016/02/17/aston-martin-and-leeco-partner-to-codevelop-electric-vehicle

ASTON MARTIN
Aston Martin Lagonda Limited is a British manufacturer of luxury sports
cars and grand tourers. It was founded in 1913 by Lionel Martin and Robert
Bamford.
The firm became associated with luxury grand touring cars in the 1950s and 1960s,
and with the fictional character James Bondfollowing his use of a DB5 model in the
1964 film Goldfinger.
The company has had a chequered financial history, including bankruptcy in the
1970s, but has also enjoyed long periods of success and stability, including under
the ownership of David Brown, from 1947 to 1972 and of the Ford Motor
Company from 1994 to 2007.

LeECO
At LeEco (formerly Letv), we are boldly rethinking what is possible through a
consumer-centric lens. Unconstrained by traditional boundaries, LeEco makes it
easy for global audiences to easily access fully licensed content, view it anywhere
they want, and form meaningful connections with their social communities. Today,
after building a disruptive ecosystem of businesses around its content, applications,
and devices, LeEco is poised to deliver its vision to wider audiences around the
world.
LeEco is delivering the next generation of consumer-centric products and services
through relentless innovation. With LeEcos open and vertically integrated
approach, our mission is to open new horizons for our customers by offering the
highest-quality products.

ASTON MARTIN AND LEECO PARTNER TO CO-DEVELOP ELECTRIC VEHICLE

17 February 2016, Frankfurt, Germany: Leading global technology
company LeEco and luxury sports car brand Aston Martin today signed a
Memorandum of Understanding (MOU) towards the creation of a
partnership that will develop a production version of the Aston Martin
RapidE electric vehicle concept. It is anticipated that the partnership will
see the two companies working together in developing and manufacturing
RapidE, with potential for adding a range of next-generation connected
electric vehicles on behalf of Aston Martin, LeEco and Faraday Future.
This new signing extends the existing collabora tion between the two
companies. In January 2016, LeEco and Aston Martin revealed the first
results of their partnership an Aston Martin Rapide S incorporating the
latest Letv Internet of the Vehicle (IOV) system. The second area of the
partnership the development of low-emission vehicle technologies has
been accelerated as they have developed their respective plans for
launching a range of new electric vehicles during the second half of the
decade.
The first model developed by this partnership will be the Aston
Martin RapidE. The Aston Martin RapidE concept was created to explore
how the company can take an existing production vehicle and create an
all-electric sports sedan. Since the creation of this concept vehicle, Aston
Martin and Letv have been advancing the work on production feasibility
including the identification of technology solutions for battery systems
and powertrain. Both companies are now focused on bringing the RapidE
to market in 2018 utilising the best technologies from the companies
portfolios.
Commenting on the signing of the MOU, Mr. Ding Lei, co -founder and
global vice chairman of SEE Plan, said, Signing of this MOU ushers a new
phase of the collaborations between Aston Martin and LeEco. LeEcos SEE
Plan is dedicated to build electric, smart, connected and socialized cars.
We have been targeting the highest standard in the auto industry in terms
of design, R&D and manufacturing of our electric cars. We hope that, by
strengthening collaborations with Aston Martin, our future model s will

provide premium qualities and delicate arts and crafts as good as those
of Aston Martin.
Aston Martin CEO, Dr Andy Palmer, said: Aston Martin are dedicated to
developing a range of cars with low emission technologies. We have been
encouraged by the project speed and technical depth shown by Letv in
the development of the RapidE concept towards full production. Bringing
the RapidE to market by 2018 is an important milestone for both
companies.
Faraday has announced plans to build a factory near Las Vegas and showed off a
stationary concept vehicle of its own in January, but has yet to reveal details of the
models it intends to sell to the public.
There's a lot of uncertainty for example over the firm's proposed new plant in
Nevada, with the state appearing to want $70m in security from the firm in return
for state investment.
It is trying to encourage drivers to buy them by offering incentives, such as a
recently announced exemption from a law that states other types of vehicle can
only be driven on Beijing's roads six days a week.
This gives LeEco an incentive to invest in the business. It is currently best known for
its on-demand LeTV television service and Le smartphones.
The joint venture intends to bring the RapidE to market by 2018 using internet
capabilities developed by the Chinese firm.