Joint Venture vs Strategic Alliance
Joint venture and Strategic Alliance differ from each other financially and legally too. There is difference between them in their definitions too. A joint venture is indeed a contractual agreement between two or more companies that come together in business in terms of the performance of a business task.
A strategic alliance on the other hand is a formal relationship between two or more companies in pursuit of common goal in their business even while remaining as independent organizations. This is the main difference between the two terms joint venture and strategic alliance.
In other words it can be said the two or more companies that join together in a joint venture do not remain as independent companies in a joint venture. On the other hand the two or more companies that join together in a strategic alliance will remain as independent organizations in a strategic alliance.
There has been a lot of debate on the issue whether joint venture is better than strategic alliance. It is generally felt that joint venture is better than strategic alliance for some interesting reasons. A joint venture is legally binding in a better way than a strategic alliance.
When it comes to tax purposes strategic alliance is a bit disadvantageous when compared to joint venture. On the other hand you will find strategic alliance more flexible when compared to joint venture. Alliance can also be broken by the help of less number of lawyers. A joint venture on the other hand is not easily broken for that matter. This is because of the fact that it is more legally binding in nature.
Things would work better in strategic alliance due to the fact that it is characterized by a wonderful combination of resources or information. On the other hand lot of hard work has to be put into joint venture in order to taste success.