Issue Date: 
Tuesday, September 11, 2018

Advantages and disadvantages of Joint Ventures

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

Joint venture Advantages:

  • Provides companies with the opportunity to gain new capacity and expertise.
  • Enables companies to enter related businesses or new geographic markets or gain access to new technology.
  • Provides access to greater resources - including specialised staff and technology.
  • Shares risks with a venture partner.
  • Enables flexibility: a joint venture can have a limited life span and only cover part of what you do, thus limiting both your commitment and the business exposure.
  • Offers a creative way for companies to exit from non-core business.
  • Companies can gradually separate business from the rest of the organisation and eventually, sell it to another parent company. Roughly, 80% of all joint ventures end in a sale by one partner to another.

Joint Venture Disadvantages:

  • It takes time and effort to build the right relationships and partnering with another business can be challenging. Problems are likely to arise if:
    • The objectives of the business are not 100% clear and communicated to everyone involved.
    • There is an imbalance in the level of expertise, investment or assets brought into the venture by the different parties.
    • Different culture and management styles result in poor integration and co-operation.
    • The partners do not provide enough leadership and support in the early stages.
  • Creating a joint venture may result in more complex tax arrangements.
  • Success in a joint venture depends on thorough research and analysis of the objectives.
  • Creating a joint venture can be more costly than a consortium.

To learn more about this and many other bid conditions please attend one of our HowtoTender workshops. For more information on the tender courses please email Estelle at estelle@how2tender.com.

Title Closing Date Tender No.
Construction of Xurana Water Supply. 2018-10-05 12:00 ORTDM SCMU 11-18/19
Tenders are invited for the Waterproofing of Guttering of Office and Veranda Section of Roof of office area 2018-09-20 11:00 CSQ09181435
Appointment of a professional consulting engineer for the planning, design and project management: Upgrading of the eastern bulk outfall sewer line. 2018-10-05 14:00 TN033/2018
Tenders are invited to Supply an Tyre Repair/Break Down Service Equipment 2018-09-28 11:00 CSQ09181431
Tenders are invited to Clean, Cut all Grass. Trim Trees and Remove all Rubble in Diaz Road Depot at the Bottom Camp Area 2018-09-28 11:00 CSQ09181431
Printing Dannhauser Municipality newsletter 2018-09-26 12:00 RFQ / 460
Supply of Information Technology Hardware and Peripherals. 2018-10-05 11:00 SAMRC/ITHP-ITSD/2018/10
Tenders are invited for training per delegate for ( Renewal of Hydraulic platform truck Operation Certficate) per Delegate 2018-09-27 11:00 CSQ09181415
Short Term Insurance Broking. 2018-10-08 11:00 REF: NWPB/RFT/NWPBINS/003/2018
Tenders are invited for training per delegate. ( Hydraulic platform operation certificate) 2018-09-27 11:00 CSQ09181415
Tenders are invited for ( Renewal of Expired Crane Truck Operation certificate) per Delegate 2018-09-27 11:00 CSQ09181415
Tenders are invited for Training per Delegate (Crane truck Operation certficate) 2018-09-27 11:00 CSQ09181415
Provision of build environment professional services for The Independent Development Trust (IDT). 2018-10-08 12:00 IDT-MP/DOE/7SCHOOLS/2018
Supply and deliver display case with 30mm wood base 700x150x800mm. 2018-09-20 11:00 GQ09181938
Supply and deliver 400x400x100mm 6mm clear perspex box. 2018-09-20 11:00 GQ09181938
Supply and deliver 500x400x300mm 6mm clear perspex 2018-09-20 11:00 GQ09181938
Provision of Travel Management Services to Overberg Water for a period of 36 Months. 2018-10-08 12:00 RFQ OW-440/2018/19
Supply and deliver 600x400x300mm 6mm clear perspex box. 2018-09-20 11:00 GQ09181938
Supply and deliver 700x400x300mm 6mm clear perspex box. 2018-09-20 11:00 GQ09181938
Supply and deliver 800x400x300mm 6mm clear perspex box. 2018-09-20 11:00 GQ09181938

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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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