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Joint ventures and strategic alliances are used to accomplish a wide range of business objectives.
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An important factor is frequently a requirement for businesses to rapidly and flexibly combine complementary core functions to develop improved
products and services. Joint ventures may facilitate the rapid formation of new products, businesses or standards and allow businesses to benefit from
substantially increased economies of scope and scale. Specific joint venture goals may include the following:
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Information technology joint ventures which permit assets to be quickly and flexibly redeployed and combined to create new products and services
while permitting the ventures to remain specialized in their areas of core competency;
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Research and development joint ventures which facilitate the performance of research projects which are too expensive or risky for any single
competitor to undertake, and may also help to more rapidly facilitate the widespread adoption and dissemination of the results of such projects;
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Standard-setting joint ventures which help to facilitate more rapid development and widespread adoption of technical standards, especially when
formed by small to medium-sized firms; and
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Joint ventures which are used to manage and operate disaggregated assets, thereby creating new potential investment vehicles.
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Examples of different types of recent Canadian joint ventures include:
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Strategic alliances which permit competing suppliers of IT services to each concentrate on their core competencies in a manner that permits each
to contribute complementary products and services to create integrated "best of breed" solutions;
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Outsourcing joint ventures pursuant to which manufacturing facilities are sold and supply arrangements are outsourced to a joint venture partner;
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Technology transfer joint ventures used in the context of foreign direct investment in other countries. In such circumstances, use of a joint
venture may be desirable due to the local venture's knowledge of its market or, in some cases, may be mandated by restrictions on foreign direct investment;
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Joint ventures among members of complementary networks which add substantially to the value of the network externalities enjoyed by each network.
Examples include the internet worked automated bank machines, telecommunications and courier delivery networks;
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Production specialization agreements which should, at least in theory, allow competitors to achieve cost savings through longer production runs;
and
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Joint ventures to manage and operate commercial real estate properties, thereby permitting the subdivision and sale of real estate investments in
what would otherwise be sub-economic units.