Joint Venture vs. Strategic Alliance

Difference Between Joint Venture and Strategic Alliance

Joint venture and Strategic Alliance differ from each other financially as well as legal point of view. Their definitions are also quite different. A joint venture refers to a contractual agreement between two or more companies coming together in business to achieve a specific target.

On the other hand a strategic alliance refers to formal agreement between two or more companies with a view to achieve a common goal in their business while remaining at the same time as independent organizations. This is the basic difference between the two terms.

In other words two or more companies joining together in a joint venture do not remain as independent companies once the agreement is done. On the other hand the two or more companies that join together in a strategic alliance will remain at the same time as independent organizations.

There has been a lot of discussion on the topic whether joint venture is better than strategic alliance. A joint venture is legally well jointed in a better way rather than a strategic alliance. Generally, some people think that joint venture is better than strategic alliance due to some reasons.

Strategic alliance is slightly disadvantageous in the matter of taxpaying. But strategic alliance is more flexible comparing to joint venture. Alliance can also be broken with the help of less number of lawyers. A joint venture on the other hand is not easily broken because it is more legally binding in nature.

Things works better in strategic alliance because there is a remarkable sharing of resources or information. On the other hand joint venture calls for a lot of hard work in order to taste success.

 

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