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Study Notes

Joint Ventures

Level:
AS, A-Level, IB
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 9 Jan 2023

A joint venture occurs when two or more businesses join together to pursue a common project

Joint Ventures

With a joint venture, the businesses remain separate in legal terms. Joint ventures are becoming common as firms want to benefit from collaborative work in reaching a mutually agreed strategic target e.g. a joint-research project to share the fixed costs of higher risk research.

Joint Ventures – Recent Examples

  • Vodafone & Telefónica agreed to share their mobile network.
  • BMW and Toyota co-operate on research into hydrogen fuel cells and ultra-lightweight materials.
  • Google and NASA developing Google Earth.
  • Hollywood studios combining to fight internet piracy.
  • BMW and Jaguar Land Rover – creating a joint venture to share electric car technology
  • Toyota investing $600m in China’s ride-hailing firm Didi and setting up a joint venture.
  • Docklands-Light Railway (DLR) - a joint venture between French transport group Keolis and infrastructure services provider Amey, part of Spanish multinational Ferrovial.
  • Brewer Marston's forming a joint venture with Carlsberg's UK arm, uniting ales such as Pedigree and Hobgoblin with Danish Pilsner and Somersby cider.
  • GSK and Sanofi, two of the world's biggest pharmaceutical giants, joined forces in 2020 to try and create a vaccine to stop the spread of Covid-19.

Other notable examples of joint ventures:

  1. Toyota and Mazda: In 2015, Toyota and Mazda announced a joint venture to build a manufacturing plant in the United States. The plant, which opened in 2021, is jointly owned and operated by the two companies.
  2. Airbus and Bombardier: In 2018, Airbus and Bombardier announced a joint venture to develop and manufacture aircraft, including the C Series, a new line of narrow-body jets.
  3. Disney and 21st Century Fox: In 2017, Disney and 21st Century Fox announced a joint venture to create a new streaming service called Hulu. Disney and Fox each own a 50% stake in the company.
  4. General Electric and Baker Hughes: In 2017, GE and Baker Hughes announced a joint venture to create a new company called GE Baker Hughes, which provides technology and services to the oil and gas industry.
  5. Nestle and Starbucks: In 2018, Nestle and Starbucks announced a joint venture to create a new line of coffee products. The two companies are collaborating to develop, roast, and distribute coffee products under the Starbucks brand.

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