Free Essay On Project Based Collaboration And Equity Joint Ventures
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Working with others to perform a task so as to achieve a shared goal is known as collaborations. Project based collaborations, also known as non-equity ventures, are where two or more organizations work together on a project to realize a shared goal. It is also an active and problem –centered approach to learning. An equity joint venture, on the other hand, is a contract set between two companies to get into separate business venture together (Menipaz& Menipaz, 2011). The purpose of the equity joint venture is to reduce barriers to entry, provide capital raising opportunities and also to create economies of scale while creating an ultimate time that the joint venture exists.
Project based collaborations and equity joint ventures are ways implemented by the organizations to help in attaining certain set goals. They differ in several ways. First, for the project-based collaborations, legal corporate entity is not created, and the partners operate based on an agreement. But in equity joint venture, legal corporate entities are created. The second difference is that in project-based collaboration, partners do not pursue ownership of a new corporate entity on a sustainable basis. In equity joint venture, partners tend to seek ownership of a new corporate entity (Menipaz & Menipaz, 2011).
The third difference is that project-based collaborations do not have a well-defined exit date as compared to the joint venture which has. The last main difference between project-based collaborations and the equity joint ventures is that the collaboration has an intensive scope that typically involves the development, manufacturing, a new product and distribution. Equity joint venture, on the other hand, has its partners that each participates in losses and gains depending on the percentage equity ownership they have in a joint venture (Menipaz & Menipaz, 2011).
In conclusion, the project-based collaborations are also set as the non- equity joint ventures and they tend to have different features and setups as compared to the equity joint ventures. The two are none the less can be implemented by various organizations to attain a set goal.
Menipaz,E. & Menipaz. A (2011). Business & Economics. International Business: Theory and practice. Sage.
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