EFFECT OF PARTNERSHIP AND JOINT VENTURE BUSINESS IN SMALL SCALE BUSINESS IN NIGERIA, PROBLEM AND PROSPECT

EFFECT OF PARTNERSHIP AND JOINT VENTURE BUSINESS IN SMALL SCALE BUSINESS IN NIGERIA, PROBLEM AND PROSPECT

CHAPTER ONE

INTRODUCTION

1.1.    BACKGROUND TO THE STUDY

Small and Medium Enterprises (SMEs), new or existing, often face certain challenges when they approach products providers for both enterprise fixed capital investment and market standards. The insufficient supply of microloans is a major issue, particularly where business creators are unemployed persons, women or form part of ethnic minorities with different cultural dependencies. Supporting the supply of microloans is therefore not only an issue of entrepreneurship and economic growth, but also of social inclusion.

Nigeria has been in the constant wheel of fighting for liberalization of market in the African’s sister countries. This gave to the country the political power but remaining behind economic development (NSGRP, 2008). Further, it was reported that there are more than 1.7 million SME projects in Nigeria that employed more than 3 million people, which represent 20% of labor force in Nigeria, where SMEs are vital engines for the economy growth and play a great role for gross domestic product of Nigeria (NSGRP, 2008).

Deakins (2009) agreed that there are quiet numbers of potential reasons why firms and organizations merge together to form a partnership or joint venture businesses.

A joint venture is a procedure used to respond to specific business phenomena such as access to new markets, specificgovernment policy, business capacity, technology transfer or economies of scale. An international joint venture is aseparate legal organisational entity representing the partial holdings of two or more parent firms, in which theheadquarters of at least one is located outside the country of operation of the joint venture. The feasibility and thedesirability of a joint venture must be assembled by careful analysis of the economic, political, social and culturalenvironment within which the venture will be implemented and managed.

A joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets. There are other types of companies such as JV limited by guarantee, joint ventures limited by guarantee with partners holding shares.

Companies typically pursue joint ventures for one of four reasons: to gain faster entry into a new market; to acquire expertise; to increase production scale, efficiencies, or coverage; or to expand business development by gaining access to distributor networks.

On the other side, A partnership business is an arrangement where parties, known as partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations. It is also an association of two or more persons to carry on as co-owners of a business for profit. Partnerships are sometimes used in small retail, service, or manufacturing companies. It is fairly easy to form, and they are form simply by a verbal agreement, or more formally, by written agreement.

EFFECT OF PARTNERSHIP AND JOINT VENTURE BUSINESS IN SMALL SCALE BUSINESS IN NIGERIA, PROBLEM AND PROSPECT