Describe in brief the features of a cooperative and a joint venture.

Question

What will be an ideal response?

Answer 1

A cooperative is a business composed of independent producers, wholesalers, retailers, or consumers that acts collectively to buy or sell for its clients. Usually the cooperative's net profit is returned to the patrons at the end of each year, resulting in no profits and no taxes to it. To receive the advantages of a cooperative, a business must meet certain requirements of federal and state governments. The cooperative form of business is usually associated with farm products-purchasing, selling, and financing farm equipment and materials, and/or processing and marketing farm products.
Working relationships between noncompeting companies are quite popular these days and may become even more so in the future. The usual arrangement is a joint venture, which is a form of temporary partnership whereby two or more firms join in a single endeavor to make a profit. For example, two or more investors may combine their finances, buy a piece of land, develop it, and sell it. At that time, the joint venture is dissolved.
Many small businesses are using their research and development capabilities to form joint ventures with larger companies that provide them with marketing and financial clout, as well as other expertise. In summary, in an endeavor where neither party can achieve its purpose alone, a joint venture becomes a viable option. Usually, income derived from a joint venture is taxed as if the organization were a partnership.