Is a Joint Venture in Your Future?

In a global economy, more and more joint ventures will be created. According to an article in the Harvard Business Review, “joint ventures and alliances can deliver more shareholder value than mergers & acquisitions can.” However, the same article goes on to say that “getting joint ventures off the ground can trip you up in unpredictable ways.” Successful organizations understand the secrets to “getting them off the ground.”


At its core, a joint venture is a business partnership established between two or more parties for the purpose of expanding the business and adding value by joining forces and working as a team. While everything that goes into the business arrangement is important, the first step of solidifying the team may be the most important to ensuring the joint ventures ultimate success, since a joint venture’s success is determined by its ability to bridge gaps in corporate cultures and diversity. Individuals must work together efficiently and effective as a team. As the former CEO of GE, Jack Welch said, "You build the best team, you win."


In a study of 59 companies and 405 alliances called, “Managing alliance relationships: key challenges in the early stages of collaboration”, Michael J. Kelly, Jean-Louis Schaan and Helen Joncas reported that people/relationships equated to 55.1% of first year problems. A closer look at ‘Relationship Issue Causes’ stated that the inability to communicate was at the root of 50% of first year failures. The study concluded that… “Relationship issues appear to be a major challenge for companies involved in alliances. Underestimating their importance or failing to consciously manage them during the implementation and operation phases of a strategic alliance has caused the failure of many ventures.”


If your company is considering a joint venture we recommend a few first steps to insuring success.


Keys to Success

1. Build a strong team first.

  • Internally
  • Externally

2. Build relationships based on:

  • Earned trust
  • Demonstrated integrity


Team building is often associated by business owners and managers as a tool to build an internal workforce into a more productive one. Team building, however, should be extended to include all external relationships, including joint ventures.

Because forming and executing alliances is a highly competitive business advantage, executives will be required to be more adept at dealing with the soft issues involved. Those who are willing and able to take the necessary first steps and manage the interpersonal relationship issues that are bound to crop up will clearly be in a position to out-perform their competition.

Debra Ford
(281) 415-0673
Author: Debra Ford
Phone: (281) 415-0673
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