What is a Joint Venture?

• A. A New Entity, Shared organisation setup by 2 or more firms but each retain their own independent entity.
• B. A firm that outsources all functions to a third party.
• C. An internal consolidation of assets with no external partners
• D. A casual collaboration.

Answer: (A)

A joint venture is formed when two or more organisations create a separate new entity to pursue a specific business objective, sharing ownership, control, and returns while each partner remains a distinct entity outside the venture. The first option describes this precisely: a new, jointly owned entity created by two or more firms, with shared governance, while each firm keeps its own independent identity outside the venture.

Outsourcing all functions to a third party is simply handing work to an external provider, not creating a joint venture. An internal consolidation of assets with no external partners would be a merger or internal restructuring, not a JV. A casual collaboration lacks the formal structure and separate entity that characterise a joint venture.