Why strategic alliances are vital to business growth

There are various joint venture methods, each suitable for a specific function. Here's all you need to understand.

For years, joint ventures in international business have actually culminated in equally advantageous outcomes, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are lots of reasons companies enter joint ventures however perhaps the most crucial of which is to take advantage of resources and access competence that one company might be missing out on. For example, one company may have excellent marketing and distribution channels however lacks a structured manufacturing center. By partnering with a business that has a reputable production process, both entities benefit greatly. Another reason why JVs are popular is the reality that companies share expenses and risks when embarking on a joint venture. This makes the collaboration more appealing as both parties would share the expense of labour and advertising, and they both benefit from lower production expenses per unit by leveraging their abilities and combining knowledge.

Business expansion is an ambitious goal that any business owner considers at some point during their professional career, however, it can be an extremely demanding and pricey process. It is for these factors that some business people opt for joint ventures when attempting to break into brand-new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can considerably increase the chances of success as partners pool their resources and connections in an attempt to maximise effectiveness. For instance, a company wishing to expand its distribution to brand-new markets and areas can gain from partnering with regional businesses. By doing this, it can gain from an already existing local distribution network, not to mention having access to knowledge and proficiency on the target market. Beyond this, guidelines in certain jurisdictions limit access to foreign businesses, implying that a JV agreement with a regional entity would be the only way to gain access.

There's a long list of joint ventures that covers different sectors and businesses across the globe, some of which have culminated in the creation of the world's most successful companies. That said, there more info are different types of joint ventures and selecting the right one greatly depends on the objectives of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a type of collaboration that combines 2 entities from different backgrounds to reach a shared objective. This could be a JV in between a commercial entity and an academic institution or short-term collaboration in between a business owner and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular vehicle for growth as these bring together two entities that co-exist in the very same supply chain like buyers and suppliers, and they offer increased growth opportunities for both parties involved.

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