Difference Between Companies And Joint Venture

Contracts
Companies can also maintain trust with customers, through contracts. Being willing to make a promise or to enter into a contract is one way in which a firm can demonstrate to others its confidence in its own competence and reliability with regard to quite specific activities (Blois, 1999). Contracts are based on the shared norms and values of the two companies. When companies create a contract, they trust each other to fulfill the obligations of that contract. When it comes to contracts companies have the choice of really two options. They could either chose a binding or non-binding contract. Binding contracts ensure that each party will follow through on the commitments (Malhotra, 2002). If one company proposes a binding contract and the other company agrees, the two companies can eliminate the risk of exploitation and enjoy a mutually beneficial exchange (Malhotra, 2002). The good thing about binding contracts is …show more content…
If two companies are in the same industry or share a common goal, they sometimes choose to work together by forming a separate company. A joint venture is a separate business created jointly by two or more parties that is separate from their original company. Instead of competing with each other in the same industry, they form a company together to compete with the rest of the market. Joint ventures rely a lot on trust. Both parties share a common goal and work together to complete that goal. Both parties have to be willing to trust one another for the best interest of the company. They can maintain their trust in multiple ways. Communication between companies would be the first step. If both companies communicate their concerns about future plans and goals with each other, the company should run smoothly. Both parties could decide on hiring an individual that they both trust to run their join company. This would alleviate some stress from the business