Business Studies

In 2005 Mahindra & Mahindra had an agreement with Renault, a French car manufacturing company to produce and commercialize Logan. It is a 51:49 partnership between Mahindra & Mahindra and Renault. The Logan plant at Nasik has a capacity to produce 50,000 units per year. The main aim of the two companies is to produce no-frills Logan car with classifying features at an aggressive price & launch them exclusively for Indian market. Renault wanted to increase the global car sales by 800,000 by year 2009 & they believed that this figure could be achieved by investing in Indian market. What kind of arrangement is between the two companies? Define it.


SOLUTION
The kind of arrangement between the two companies is a Joint Venture.
Joint Venture can be defined as two or more parties coming together to form a commercial enterprise for a specific purpose which when completed results in the end of that specific venture.
Example: Maruti Suzuki is a joint venture.
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