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.
Dragon Naturally Speaking Professional v.15 Software 2018-12-19 11:00 RFQ 1660216
Invitation for the provision of security services at head office for the department of social development 2019-01-29 14:00 NW/DSD/08/2018
Supply and Delivery Of Cabinet Five Drawer Shelf 2018-12-17 12:00 Q06.12.18
TRACK-IT Software Renewal 2018-12-18 12:00 Q09.12.18
Re-Supply and Delivery of 400lt Skid Unit Complete with Motor and Hose Reel. 2018-12-18 12:00 Q08.12.18
Videography and Photography Services for Cross Over 2018-12-20 12:00 Q07.12.18
Supply and Delivery of 6m Steel Container to Fairview 2018-12-18 12:00 241/2018/19
Supply and Delivery of Traffic Uniforms for Traffic and Law Enforcement Officers 2019-01-15 12:00 08/2/16/41
Supply and Delivery of Traffic Signal Materials (Until June 2020) 2018-12-20 10:00 CES 34/2018
Supply and Delivery of Road Traffic Signs (Until 30 June 2020) 2018-12-20 10:00 CES 33/2018
Invitation for the provision of security services at Dr. Kenneth Kaunda District for the Department of Social Development 2019-01-30 11:00 NW/DSD/06/2018
Invitation for the provision of security services at Dr Ruth Segomotsi Mompati District for the Department of Social Development 2019-01-31 11:00 NW/DSD/05/2018
Supply & delivery of toolboxes. 2018-12-20 10:00 DIE0015186
Supply & delivery of fluke clamp 375. 2018-12-20 10:00 DIE0015182
Appointment of a Service Provider to Design, Manufacture and Delivery of Two (02) Fire Trucks for a period of Eighteen months (18) for The North West Province and Maintenance of Three (03) years after delivery. 2019-01-31 11:00 CS&TM 07/18/19
Provision for municipal finance management programme 2019-01-14 12:00 GTLM/FS06/2018/2019
Supply and delivery of ready mixed, concrete 2019-01-14 11:00 FIN/SC/C1/09/2018
Supply and delivery of cement products, kerbs, etc 2019-01-14 11:00 FIN/SC/CP/09/2018
Supply and delivery of crushed stone, crusher sand, slurry seal 2019-01-14 11:00 FIN/SC/S1/09/2018
Upgrade of Rosendal Chlorine Station. (Supply and Install Chlorine Dosing Equipment) 2018-12-18 11:00 FQ/SM: 86/19

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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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