IGCSE Business Studies Practice Exam 2025 – Complete Study Guide

A joint venture is defined as an agreement between two or more businesses to collaborate on a specific project, sharing resources, risks, and profits or losses associated with that project. This cooperative arrangement allows the parties involved to combine their strengths, such as expertise, capital, or technology, to achieve a common goal that may be difficult to accomplish individually.

Joint ventures are often formed to leverage the unique capabilities and resources of each participating entity, which can enhance innovation, reduce costs, and accelerate market entry. It is important to note that while joint ventures can formally establish a new entity, they can also occur as a contractual agreement without creating a separate legal business structure.

The other options don't align with the definition of a joint venture. A partnership where profit is not shared does not reflect the core aspect of joint ventures, which is sharing both risks and rewards. A business that operates independently is a separate entity and does not involve collaboration or shared projects with others. Finally, a franchise agreement typically involves a franchisor granting rights to a franchisee to operate under its brand and use its business model, which is distinctly different from the collaboration seen in a joint venture.