Joint venture means establishing a new business that is formally owned by two or more firms otherwise independent firms. 

Advantages : 

(a) The local partner also contributes to the equity capital, the international firm finds it financial less burden some to expand globally. 

(b) It is possible to execute long projects requiring huge capital and manpower. 

(c) The foreign business firms may get benefits from a local partners knowledge of the host counterion. 

(d) Risk and cost can be avoided by sharing. 

Disadvantages : 

(a) Technology and secrets disclosed to others. 

(b) Dual ownership leads to conflict

Detailed Answer : 

When two or more individuals or enterprises either private or government owned or a foreign company join together through participation in equity capital for achieving a common target and mutual benefit is known as joint venture. 

(a) Reduces competition : When two companies join together it results in reducing the competition as instead of wasting resources in competition they will strengthen their organization. 

(b) Reduces risk : High risk involved in new and innovative ventures can be reduced when two companies join together to share the risk. 

(c) Advance technology : By joining hands with foreign companies, Indian company can get the benefit of advanced technology. 

(d) Large capital : In joint ventures, two companies together contribute capital, as a result large capital can be arranged without much difficulty. 

(e) Reduction in cost : When two firms join together, then they can operate on large scale and get benefit of economies of scale hence, reduces cost of production and marketing. Limitations of Joint Venture : 

(a) Problem in sharing capital : To get control over the company both firms try to increase equity share holdings. 

(b) Legal restrictions : Often there are legal restrictions on foreign investment, e.g., - FERA and FEMA have laid restriction on foreign participation in equity capital of an Indian company. 

(c) Conflicts : Sometimes there can be conflicts among different parties involved in joint ventures because of difference in culture and economic development of two countries. 

(d) Mergers and monopolies : By taking major share holdings in equity capital or by mergers, big companies may create monopoly in market.