Description
Introduction: What is a Joint Venture?
The dictionary defines ‘Joint Venture’ as: “A joint venture (more often than not it is abbreviated as JV) is a legal entity or agreement formed between two or more parties to undertake economic activity together. The parties agree to create a new entity by both contributing equity, and they then share in the revenues, expenses, and control of the enterprise.
The venture can be for one specific project only, or a continuing business relationship such as the Sony Ericsson joint venture. This is in contrast to a strategic alliance, which involves no equity stake by the participants, and is a much less rigid arrangement.”
There doesn’t have to be a high risk of failure involved and a new entity is not necessarily formed. Individuals and companies do joint ventures all the time… out in the brick and mortar world as well as in cyberspace. As a matter of fact, the joint venture is one of the better kept secrets of Internet marketing.
The joint venture is an idea as old as time. The cavemen most likely figured out that buy pooling their efforts they could more easily feed and clothe themselves. By pooling talents and resources so much more can be accomplished than any one individual or company could accomplish alone. That’s why so many individuals and companies enter into joint venture agreements. Joint ventures are the stuff that fortunes are made of.
One of the better known joint ventures of modern times is the one that Bill Gates, of Microsoft fame, entered into with IBM, the giant of the electronics industry. Bill Gates had developed DOS while IBM had market share. The rest, as they say, is history. Just think what our world would be like if that joint venture had never happened. Oh…and as most of us already know, Bill Gates was a billionaire before he was 31.
Joint Ventures in the Conventional Business World
Out in the ‘real’ brick and mortar world, joint ventures happen all the time and some of the big ones affect our pocket books and give us access to better technology as well. Many times very large and powerful international companies will join into a joint venture agreement. Mergers often require governmental approval but joint ventures do not. A joint venture is a simple agreement between companies (or individuals) to pool resources and talent on a single project.
For example: The Auto Alliance International (AAI) is a joint venture between Ford Motor Company and Mazda. In this Joint venture, Mazda first bought Ford’s
unused Michigan Casting Center for the purpose of producing of 626 sedans. Then Ford bought 50% of the plant back. The Auto Alliance International Company is located in Flay Rock, Michigan and today produces the Ford Mustang and the Mazda6.
Another example of a joint venture that may in some way affect individuals is what is now known as Sony Ericsson. This is a joint venture entered into between the Japanese company, Sony and the Swedish telecommunications company, Ericsson. In any joint venture, each party brings certain advantages to the agreement. In this case Sony brought global consumer marketing expertise and Ericsson brought technology expertise in the communications field. The joint ventures’ purpose was the manufacture of mobile phones.
Verizon Wireless is the product of a joint venture between Verizon Communications (55%) and Vodafone Group (45%) and Cingular Wireless is a joint venture between AT&T Inc. (60%) and Bell-South (40%).
As you can see, huge International companies make use of the joint venture everyday. They do it because it is just good business. They can share capital, technology, human resources, risks and rewards when they form of a new entity under shared control.
Joint Ventures in Internet Marketing
A joint venture in Internet marketing is defined as, “A mutually beneficial cooperation between two or more web site owners” according to the Internet Marketing Dictionary.
Many times joint ventures in Internet marketing are entered into between a person who has developed a new and innovative product or service but has no Internet marketing history and no list to market his product or service to and an established Internet Marketer who has spent years developing his list and his reputation.
This is the kind of agreement that can be described as a win-win situation. The joint venture gives the developer of the new product or service access to potential customers that he would not otherwise have access to and the experienced Internet Marketer gains access to new product or service that the members of his list can benefit from. Both the product/service developer and the established Internet Marketer make a profit that neither of them would have made without the other… and that is the very essence of the joint venture.
By joining forces and pooling resources and talents, a joint venture allows all parties to accomplish more than any one of them could have accomplished alone.
The fact is that the joint venture is one of the better kept secrets of successful Internet Marketers. You can have been trying to break into the Internet marketing game for a very long time before you have ever heard the term. Joint ventures are certainly not a new concept, however. They have been around since Internet marketing began.
For the new Internet Marketer, the joint venture is the quickest way to making a profit. The old pay-per-click advertising way is expensive and not near as effective as the joint venture. By entering into a joint venture agreement with an established Internet Marketer, a newbie can get his product or service offered to those most likely to buy it at almost no cost quickly and efficiently.
That’s why we want to see you become the next Internet Marketing Rock Star!
And yes, you most definitely can do it, even if you are a newbie!
Chapter 1: How Does a Joint Venture Normally Work
Often time’s even very well established Internet Marketers will enter into a joint venture enterprise… even those who are in direct competition with one another. Why, you ask, would competitors ever agree to a joint venture?
The answer is simple: Joint ventures are just simply good business and even competitors can both make a profit by using them. Neither marketer is entering into a joint venture for the purpose of helping his competition. He is entering into it to help himself.
At first glance, the joint venture agreement looks a bit daunting but actually it is pretty simple. A joint venture just joins the customers, advertising, products, services, knowledge, skills, etc. of one website owner with those of another website owner for a specific project. Joint venture agreements can be between two or more website owners.
Let’s say that an established Internet Marketer develops or acquires the rights to a product or service that would be beneficial to his own list of potential customers. He could sell that product or service only to his own list and make a nice little profit.
However, by entering into a joint venture agreement with other website owners who have lists of potential customers that would be interested in the same product or service, he could multiply his sales many times over. The owners of the other websites get the opportunity to recommend the product to their own lists and make a profit as well. Everybody wins.
The joint venture works for established Internet Marketers, as well as, for new comers to the Internet marketing field. Established Internet Marketers are always on the look out for new and innovative products and services that would help their customers. Bt approaching established Internet Marketers with a joint venture proposal, many new comers have gotten their start.
Types of Joint Ventures
A joint venture is an agreement between two or more individuals or businesses whereby both contribute to a joint business endeavor. They share in the expenses associated with the project and they share in the profits realized. Joint ventures are very common in the brick and mortar world, as well as, in the online world of Internet marketing.
There are basically two types of joint ventures… the Insider Joint Venture and the Outsider Joint Venture. Both kinds are profitable the difference is who the partners in the agreements are.
The insider joint venture agreement allows all parties to it access to the same private areas of the business such as the administration panel, accounting, sales records, and other insider’s knowledge. The product or service that is the focus of the agreement is usually developed as a joint effort by the parties to the agreement. Ownership of the product or service is jointly held.
The Outsider Joint Venture is the kind that is most common in the Internet marketing arena. In this kind of joint venture, there are no common administration panel, accounting or sales records. Each entity remains separate. Usually an individual or company has developed a product or service but has no customer base to market it to.
The individual or company will approach an established marketer who does have a customer base, list or market share that would be interested in the product or service. They enter into a joint venture agreement where costs of marketing and profits made are shared. Sometimes there is an even split and sometimes the split is on a percentage basis other than 50/50.
The joint venture enterprise can be profitable to all parties to the joint venture agreement and the cost of advertising is minimal. The joint venture is an old idea that is being made new again via Internet marketing.
