From the outset, partner companies in successful joint ventures focus on how to find a joint venture partner and once located, they conduct careful partner-fit assessment before jumping in
A joint venture is a collaborative tool used by many companies around the world to tap into new growth opportunities because it allows two or more companies to come together and share ownership, returns and risks for the purpose of a specific project or another commercial activity. However, the advantages joint ventures provide can quickly be outweighed by failure to find the right joint venture partner. Such failure often results in unaccomplished business targets, damaged business relations, bad reputation, intellectual property theft (copyrights, trademarks and patents) and lengthy legal battles. Therefore, finding the right joint venture partner is essential to the success of a joint venture and is one of the first steps companies undertake before establishing a joint venture.
Before beginning the search for a joint venture partner, successful companies first narrow down the search by defining the elimination criteria
This enables companies to narrow the pool of candidates and focus on potential partners that are suitable for a joint venture. Afterwards, companies apply prioritization analysis to create a shortlist of potential partners. These shortlisted partners are then rigorously screened to assess their strategic and cultural fit for the joint venture. In successful joint ventures, companies assess the partner fit based on a comprehensive set of predefined criteria such as company strategy, strategic intent, decision-making style and processes, risk tolerance and culture.
So far, the article highlighted the importance of finding the right joint venture partner and the processes successful companies use to narrow down potential partners. However, the question on everyone’s mind is how do you find a joint venture partner?
The strategy to find and pursue a potential joint venture partner
We created the following strategies for finding and pursuing potential joint venture partners:
- Direct competitors. Analyze competitors in the same market space as your company and find the businesses that can earn incremental revenues or increase efficiency from the joint venture.
- Companies with complementary needs. Analyze the weaknesses of your company and locate companies that can help fill in the weak spots.
- Parallel Niche Providers. Locate companies that are not in the same market as you, are non-competitors, but they service your ideal customers. A joint-venture with a non-competing company can benefit both from shared resources and referrals.
- Suppliers and Distributors. Your joint venture partner can be your supplier or distributor.
- Companies with complementary services or products. Find companies that offer products or services that your customers would need or want when they purchase your products or services. Both joint venture partners can benefit from cross promotion and referrals.
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