Issue Date: 
Monday, February 15, 2016

5 Reasons Why Joint Ventures Fail

Joint ventures are collaborative arrangements where two or more businesses decide to collaborate for a common purpose such as bidding for a tender.
There are many examples of successful Joint Ventures, such as Sony-Ericsson, Virgin Mobile India Limited, Nokia (Siemens AG and Nokia Corp), Cadbury Schweppes PLC Carlyle Group Joint Venture and Chery Jaguar Land Rover Automotive Company. They are all well-known and are very lucrative. But having a Joint Venture does not guarantee success.

There are many reasons why Joint Ventures fail and five of the most common reasons are:
1.    Lack of a proper Joint Venture Agreement. The importance of a proper JV Agreement cannot be emphasized enough. Ensure that you have a proper contract in place that covers the entire foundation of your JV.
2.    Lack of finance. If one of the parties to the Joint Venture is struggling financially it can be the downfall. The simple reason is that the struggling partner will drain the Joint Venture, not allowing the it to build up capital for challenging           times or future expansions.
3.    Control issues. In any relationship you will always find that someone needs to be the leader or the decision maker. A Joint Venture is the same - somebody needs to be in control. Ensure that the correct leadership is appointed. 
4.    Compatibility. Sometimes in the rush of securing a tender a business owner will go into a Joint Venture with another business owner who does not have the same values and ethics. This is a dangerous mistake. Remember that you           have established a certain way of doing business and that you have invested a lot in building the ethics in your business. Ensure that the Joint Venture partner that you sign up with is compatible with your policies of running a                     business. 
5.    Unrealistic expectations. Ensure that all role players are on the same page when it comes to the Joint Venture's successes. There must be clear indicators on the chances of winning a tender and also the expected profits to be                 made after the awarding of a tender and the completion of the tender. All the parties involved must be briefed on the expected profits so that there are no unrealistic expectations from any of the parties involved.

If you tend to these five critical areas in your Joint Venture the chance for it to succeed will increase immensely. 

To learn more about this and many other tender conditions please attend one of our How-to-Tender workshops. For more information on the tender courses please email Werner at werner@how2tender.com

This article was written by Werner van Rooyen, Director of HowToTender (Pty) Ltd. which specializes in tender consulting and tender training

Title Closing Date Tender No.
Sound and Lighting: Live Gospel Show 24 November 2018 2018-11-21 12:00 B346/2018/19
Backfill and reinstatements of trenches & other excavations in existing roads and other paved surfaces in ward 2 2018-11-27 12:00 213/2018/19
Backfill and reinstatements of trenches & other excavations in existing roads and other paved surfaces in ward 6 2018-11-27 11:00 RFQ214/2018/19
Supply and Install Air Conditioners at Tshepong Laboratory 2018-12-12 10:30 RFQ NO: 1464133
Backfill and reinstatements of trenches & other excavations in existing roads and other paved surfaces in ward 9 2018-11-27 12:00 215/2018/19
Renovations to Wf Knobel NHLS Laboratory in Limpopo 2018-12-13 11:00 RFQ NO: 1339393
Backfill and reinstatements of trenches & other excavations in existing roads and other paved surfaces in ward 10 2018-11-27 12:00 216/2018/19
Call for Auctioneers to submit quotations for providing service to auction redundant and obsolete inventory and movable assets on behalf of Knysna Municipality 2018-11-27 12:00 190/2018/19
Render a Cleaning Service at the Premises of the Metro North Education District (Mned) Office, Situated at 9 Timmerman Street, Parow for a period of two (2) years, starting from 1 April 2019 to 31 March 2021. 2018-12-14 11:00 B/WCED 2473/18
On-site Auditing, application of Grading System to and Training of 349 Clubs through Club Development Toolkit 2018-12-18 11:00 ZNB: DSR43/ 1819
Provision of Short Term Insurance Services in SIU for a period of 60 months. 2018-12-14 11:00 RFP: 005/ 11/ 2018
Appointment of a Service Provider to provide an Internal Audit Services on a co-sourced basis for a period of Three (3) years 2018-12-07 12:00 RFP/ T 08- 2018/ 19
Appointment of a maximum of four (4) Media Agents to provide media buying (including print, radio, television and online media) and related services to the NRF SAASTA for a period of thirty six (36) months 2018-12-14 11:00 NRF/ SAASTA/ 02/ 2018- 2019
Supply of Integrated Competency Assessment services to SITA for a period of 36 months 2018-12-07 11:00 RFB 1841/ 2018
Provision and Implementation of Integrated Management Information System to Support SASSETA Core Business 2018-11-30 11:00 RFP/ SASSETA/ 201819128
Installation, Configuration maintenance of PABX and Call Centre Management Solution for a period of 12 months with the option to renew 2018-12-10 11:00 RFP/ SASSETA/ 201819129
Supply, Delivery, Installation and Configuration of Firewall and Switches on an outright purchase or rental basis (Managed) and maintenance thereof for a period of 12 months with the option to renew 2018-12-10 11:00 RFP/ SASSETA/ 201819130
Provision of Telecommunication and Internet Services for a period of 12 Months with the option to renew 2018-12-10 11:00 RFP/ SASSETA/ 201819125
Appointment of a service provider for the evaluation, due diligence and monitoring of Discretionary Grants until 31st March 2019 2018-12-10 10:00 RFP/ SASSETA/ 201819127/ 1
The rendering, manufacturing, repairing, fitting and supplying of aids for orthotic and prosthetic services to institutions in the Eden and Central Karoo District under Western Cape Government the Department of Health for a three year period 2018-12-07 11:00 WCGHCC031/ 1/ 2018

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Advantages and disadvantages of Consortiums

Consortiums are often considered as entities to use when responding to tenders in South Africa. The question that arises is whether to use a Consortium or a Joint Venture when responding to a tender. To help you with this we have compiled a list of advantages and disadvantages for both Consortiums as well as Joint Ventures. In this article we list the advantages and disadvantages of Consortiums. Look out for the same article on Joint Ventures.

Consortiums Advantages:

  • Easy to establish as there are no formal procedures... Read More
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