Extended-form Case Study

Verizon and Vodafone: a case study in joint ventures

Published on November 30, 2015   24 min

A selection of talks on Finance, Accounting & Economics

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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.
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.

Verizon and Vodafone: a case study in joint ventures

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