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Hello.
My name's Michael McDonald.
This is a case study.
Today we're going to be
talking about Verizon,
and Vodafone, and the issue
of joint ventures in business.
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Now a joint venture is a unique
business arrangement.
In particular,
a joint venture involves
two different companies,
both contributing assets
to a new business entity.
Essentially,
it's when two companies
form a completely
new third company.
Each of these founding companies
gets an equity stake
in the new entity.
The exact amount of that equity stake
varies from case to case.
Both founding parties
don't necessarily have to have
an equal stake
in the equity of the company
that's created,
as we'll see today.
Now joint ventures,
or joint undertakings
as they're sometimes
called in Europe,
are set up by founding parties
as a way to share
investment costs,
share ongoing expenses,
and then of course
share the assets
and the profits
between the two companies.
So the basic idea
is to take the strength
of two different companies
and use those strengths
to create a new business.
It's sort of like
when two individuals
decide to form a partnership.
Frequently for small businesses
that form partnerships,
one of the reasons
for doing this is to combine
the strengths
of two different people.
You might have someone
who's a really good salesperson
and someone who's a really
good business manager,
and they work together
to run a very
efficient business.
The same thing applies
to joint ventures.
In the case of businesses,
these business strengths
could be things like experience
in a certain geographic segment,
say another country,
or expertise
with a particular technology,
or simply a complementary
set of assets.
