What is a joint venture agreement? It is a contract between two parties used to accomplish a specific goal.
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.The important thing here is the level of comfort on such ‘important’ consultations. 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. For the on-going operations there should be appropriate interaction at different functional levels.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. It is important that both partners work towards a system based on trust and transparency.The Primary operational management should be with one of the partners, who will be accountable to the other.
The partners should clearly agree on the way the joint venture will be managed.
#JOINT VENTURE FREE#
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. At any time when one partner feels that the other is superfluous, then the end is in sight. Both partners should appreciate the need for the joint venture.The joint venture should not be a vehicle by which either partner harvests profits for itself – by selling agency arrangements, preferential price supplies or by off-loading unrelated expenses or by charging corporate overheads. The necessity for both partners to accept that their gains will flow only from the gains of the joint venture.The following extracts would highlight Sanmar’s philosophy in addressing joint venture management. Sanmar’s success in establishing and managing joint venture relationships has been recognised and its Chairman, N Sankar, has been asked to speak at different fora on the principles the Group has adopted to operate these joint ventures and promote continuing and successful interaction between the partners. Many of these joint ventures are long standing ones, some of them over 35 years. Chemplast Cuddalore Vinyls Limited - a wholly owned subsidiary of Chemplast Sanmar LimitedĪ unique feature of The Sanmar Group is that it has several successful joint venture relationships with leading international partners, both large corporations belonging to the Fortune 500 and small companies operating in niche technology areas.
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