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.
Professional Services for Panel of Land Surveyors for a period of 3 years. 2018-11-26 12:00 IHLM/72/10/2018-19/P&D
Extensions Hydrant 600mm Drilled to Fit London Type Hydrant Rillson Coated Blue Drilled Table 16 (Sabs) Drilled 4 Holes In Lieu of 8. 2018-10-29 11:00 SQ10181292
Supply and delivery of: Hellerman Tyton Power Analyser 3 phase and recorder T78 or equivalent (as per attached specifications) 2018-10-26 11:00 289168
3" Thomas Viking Johnson Joints Range Od88 - 103 2018-10-29 11:00 SQ10181292
4" Thomas Viking Johnson Joints Range Od108-129 2018-10-29 11:00 SQ10181292
Joints Short Collar 150mm Cast Iron Complete With Bolt, Nut And Rubber Rings Bitumen Dipped , Sanspar Only 2018-10-29 11:00 SQ10181292
Ward 8: 4 Leslie Road, Westriding: Stormwater pipeline extension (R100 non-refundable Tender Charge - Bank Cheques where the Drawer of the Cheque is the Bank OR cash only). 2018-11-09 11:00 1D-36071
Tyres 315/80/R22.5 Truck 2018-10-29 11:00 SQ10181291
Oil Transformer Bsi 72 Uninhibited. 2018-10-29 11:00 SQ10181291
Supply and delivery of water rescue personal protective wear 2018-10-26 11:00 290151
Blading of gravel roads in the West Region of eThekwini Municipality for 36 months (R1000 non-refundable tender charge - cash or bank guaranteed cheques only). 2018-11-16 11:00 1M-38624
Polythene 20 Mm High Density Pe 63 Pn 16 - Per 100 Metre Coils, Class 16 Only. 2018-10-29 11:00 SQ10181291
Pipes Polythene 25 Mm High Density - Per 100 Metre Coils Black , Class 16 Only. 2018-10-29 11:00 SQ10181291
Blading of gravel roads in the South Region of eThekwini Municipality for 36 months (R1000 non-refundable tender charge - cash or bank guaranteed cheques only). 2018-11-16 11:00 1M-38625
Scuff – sanding, seal and finish of wooden floor and stage of town hall. 2018-10-29 11:00 290918
Bolts/Nuts,M16 X 65mm H/Head Mild Steel (Fully Threaded) Must Be Delivered In Packets Of 50 Units 2018-10-29 11:00 SQ10181291
Blading of gravel roads in the North Region of eThekwini Municipality for 36 months (R1000 non-refundable tender charge - cash or bank guaranteed cheques only). 2018-11-16 11:00 1M-38626
Rivertown Precinct upgrade, Ward 26 (R1000 non-refundable tender charge - cash or bank guaranteed cheques only). 2018-11-16 11:00 3V-40053
Bolts M20 X 450mm Half Threaded Hex/Head With Nuts & 2 Washers (O/D 42mm X 22mm Hole 3mm Thick) 2 Curved Washers (M20 65mm X 65mm ,4 Mm 2018-10-26 11:00 SQ10181289
Insulators Line Post Insulator 22kv , 4kn , 150kv Billing , Capless Min Failing Load (Cantilever) 4kn Creepage Distance 550mm Type No. Ep 472/02 Or Approved Equivalent. 2018-10-26 11:00 SQ10181289

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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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