Exactly why strategic alliances are vital to business expansion
Exactly why strategic alliances are vital to business expansion
Blog Article
Similar to any other business endeavour, joint ventures have advantages and downsides. This post will list the most noteworthy ones.
For years, joint ventures in international business have actually culminated in mutually advantageous results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are many reasons companies go into joint ventures however potentially the most important of which is to take advantage of resources and gain access to know-how that one business may be missing out on. For instance, one company may have excellent marketing and distribution channels but lacks a structured manufacturing hub. By partnering with a business that has a well-established production process, both entities benefit significantly. Another reason why JVs are popular is the fact that companies share costs and risks when embarking on a joint venture. This makes the collaboration more appealing as both entities would share the cost of labour and marketing, and they both benefit from lower production expenses per unit by leveraging their capabilities and integrating expertise.
Business growth is an ambitious goal that any business owner thinks about at some time during their professional career, however, it can be a very stressful and expensive process. It is for these factors that some businessmen go with joint ventures when trying to break into brand-new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can considerably increase the opportunities of success as partners pool their resources and connections in an drive to maximise performance. For example, a business wanting to expand its distribution to brand-new markets and territories can benefit from partnering with local businesses. In this manner, it can take advantage of an already existing regional distribution network, not to mention having access to understanding and proficiency on the target audience. Beyond this, policies in particular jurisdictions limit access to foreign businesses, implying that a JV agreement with a regional entity would be the only method to gain access.
There's a long list of joint ventures that spans different sectors and businesses across the globe, a few of which have culminated in the development of the world's most successful companies. That stated, there are various types of joint ventures and selecting more info the best one greatly depends on the objectives of the entities included and the nature of their respective organisations. For example, project-based joint ventures are a type of partnership that unites two entities from various backgrounds to reach a common goal. This could be a JV in between a business entity and an academic institution or short-term collaboration between an entrepreneur and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular vehicle for expansion as these unite 2 entities that co-exist in the exact same supply chain like buyers and wholesellers, and they offer increased development chances for both parties involved.
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