Final answer:
A formal management organization in a joint venture allows for shared control and decision making between partners. This collaborative approach leverages partners' complementary skills and equally distributes responsibility and profits.
Step-by-step explanation:
In a joint venture, which is a form of strategic alliance, a formal management organization allows for shared control and decision making. This management structure is designed to enable partners to collaborate closely while managing the business. Through this set-up, partners can bring their complementary skills to the table, sharing responsibility, risks, and profits equitably. Joint ventures, as collaborative efforts, contrast with strict hierarchy and centralization, as they are more about cooperation and mutual input than top-down decision-making.
It is essential to understand that while formal management organizations support shared governance, they are distinct from the concepts of limited liability and separate business entities, which pertain more directly to business structures like partnerships and corporations. In the case of general partnerships, which involve two or more people owning a business, all partners participate in the management and decision-making processes of the business, without additional layers of hierarchy.