Joint venture is a type of strategic alliance. According to Merriam-Webster dictionary, joint venture is a contractual agreement joining together two or more parties for the purpose of executing a particular business undertaking. All parties agree to share in the profits and losses of the enterprise. Many U.S. companies are of the opinion that a foreign partner is the best way to gain access to the global emerging market (Hall, 1984). StonyField is considering going international .There are foreign markets that would otherwise be closed to U.S companies but the emergence of an international joint venture defuses that challenge. Though there are benefits in going into a joint venture, there are also some challenges which StonyField needs to consider before making the move. StonyField will need to weigh the pros and cons of such an alliance which are;
Pros:
Different skill set Joint ventures allow different parties to bring different skills to the table. Many companies that enter into joint partnerships pool their competencies to gain access to new technology, capital and skills, as well as critical business knowledge. This act of pooling different skill sets increases the value that can be manufactured (Jones, 2011). StonyField will gain new skill set while sharing their own competencies with the proposed joint venture company.
Reduced complex inter-organizational relationships
Joint ventures are always backed up with a legal agreement binding the companies involved in the venture. This legal ownership and agreement will reduce the challenges that StonyField will experience had the basis of the strategic alliance been on purely on a long-term contract (Hall, 1984).
Access to raw materials and new markets
A joint venture with overseas companies will give StonyField access to raw materials in that country which hitherto, could have been impossible. Apart from