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.
Video Conferencing Rental Solution for a period of 36 months 2018-12-03 11:00 HDA/JHB/2018/017
Appointment of Professional Service Providers to Compile Wayleave Applications on Behalf of Bloem Water for all Infrastructure Under their Control and Jurisdiction (Servitudes). 2018-12-14 12:00 BW249/WLA/18
Small-Scale Embedded Generation: State of Play Assessment and Policy Options to Support Social, Environmental and Economic Benefits for the Department of Energy 2018-11-23 11:00 #83306338
Mechanical Pumps Repair and Maintenance. 2019-01-18 11:00 DIA5635/2018RFP
Tracking the Transition to a Low Carbon and Climate Resilient Society and Economy 2018-11-23 11:00 #83306336
Develop, Manage, Operate and Maintain Balele Caravan & Game park. 2019-01-10 11:00 No refference
Supply, delivery and installation of a palisade fence for Lamberts Bay Caravan Park and the removal of old fence 2018-11-27 12:00 CED 06/2018-2019
Supply and delivery of Material for Foreman Containter Office Block at Clanwilliam Dam in the Western Cape for DWS Construction South 2018-11-15 11:00 WQ7605 WTE
Provision of live work training services within LOU. 2018-12-13 10:00 59CON1887
Supply and Delivery of Water Tanks, Pumps and Fittings at Clanwilliam Dam in the Western Cape for DWS Construction South. 2018-11-15 11:00 WQ7500 WTE
Erection of the Mc 310 K12 Potain Tower Crane Located at Clanwilliam Dam Raising Project Site with the view of Commissioning The Crane 2018-11-15 11:00 WQ7606 WTE
Supply and delivery of Assorted PPE. 2019-01-15 10:00 MPGXC005401
Supply: 1 each x brush cutter & 1 each x chainsaw 2018-11-15 12:00 GD11900588
Supply and delivery of “critical Spares” for the Continued Operation of the Liebherr Mobilmix 2.25 Concrete Batching Plant. 2018-11-15 11:00 WQ7503 WTE
Assurance of Engineering Integrity of the Critical Structural Beams and Critical Bearer Columns of the Liebherr Batch Plant Located at Clanwilliam Dam. 2018-11-15 11:00 WQ7553 WTE
Supply: Batteries rp240-bh 2018-11-21 11:00 GH11900216
Supply and Delivery of Temporary 200mm Dia Municipal By-Pass Pipeline on Right Bank for the Raising of Clanwilliam Dam in the Western Cape for DWS Construction South. 2018-11-15 11:00 WQ7554 WTE
Supply: Tools and equipment 2018-11-20 12:00 GD11900593
Supply: 1 each x hv oil dielectric tester 60kv 2018-11-20 12:00 GD11900594
Re-Commisioning of the Liebherr Batching Plant Located at Clanwilliam Dam Raising Project 2018-11-15 11:00 WQ7497 WTE

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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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