Joint venture
Joint venture requires a higher level of risks compared to other modes of entry such as licensing, contract manufacturing, and franchising due to the following reasons:

Shared control and decision-making:
In a joint venture, two or more entities come together to form a new entity, sharing control and decision-making. This can lead to conflicts and disagreements on important matters, which may impact the success of the venture.

Shared profits and losses:
Profits and losses in a joint venture are also shared among the partners. If the venture incurs losses, all partners bear the financial consequences, increasing the level of risk involved.

Legal and cultural differences:
When entering into a joint venture with a foreign partner, legal and cultural differences can add complexity and increase the risk of misunderstandings or disputes.

Technology and knowledge sharing:
Joint ventures often involve sharing technology, knowledge, and resources with partners. This can lead to the risk of intellectual property theft or loss of competitive advantage.

Exit strategy:
Exiting a joint venture can be complex and costly, especially if there are disagreements between partners. This lack of flexibility can increase the risk associated with this mode of entry.
In conclusion, while joint ventures can offer benefits such as shared resources and expertise, they also come with a higher level of risks due to shared control, profits, legal differences, technology sharing, and exit challenges. It is crucial for companies to carefully assess these risks before entering into a joint venture.

Joint venture