Final answer:
Joint ventures are formed for numerous reasons, such as combining competencies, sharing risk, and overcoming individual economic challenges. They allow businesses to jointly tackle industry-wide problems and benefit from economies of scale in international trade. These ventures also facilitate collective action on global economic issues and influence beneficial government policies.
Step-by-step explanation:
Several factors encourage companies to enter into joint ventures, and these include sharing competencies, managing the risk of business, and addressing the challenge of uneconomical separate existence. By forming a joint venture, businesses can leverage each other's strengths, which may include technological expertise, market presence, or capital resources, to achieve objectives that might be too difficult or costly to pursue alone. Companies often join ventures because it provides a platform for sharing responsibilities and risks, thus overcoming barriers to market entry, such as high initial costs or regulatory compliances.
Joint ventures are also attractive when companies face common industry-wide issues that may be easier to tackle collaboratively. Furthermore, they can collectively influence or benefit from governmental policies that affect their sector. Similarly, international trade can benefit small economies by allowing them to enjoy economies of scale through global partnerships, fostering competition, and enhancing product variety for consumers. Combining resources and capabilities to address systemic challenges, such as climate change or trade policies, is another fundamental aspect driving businesses towards joint ventures.