Joint ventures can be beneficial to companies looking to expand to brand-new markets and territories. Keep on reading to learn more.
There's a long list of joint ventures that spans various sectors and businesses around the world, some of which have actually culminated in the creation of the world's most successful businesses. That said, there are various types of joint ventures and choosing the ideal one significantly depends upon the goals of the entities included and the nature of their respective organisations. For instance, project-based joint ventures are a kind of collaboration that unites 2 entities from different backgrounds to reach a common objective. This could be a JV in between a commercial entity and a university or short-term collaboration in between an entrepreneur and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular means for growth as these bring together 2 entities that co-exist in the very same supply chain like buyers and suppliers, and they offer increased development opportunities for both parties.
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 numerous reasons why companies go into joint ventures but potentially the most crucial of which is to leverage resources and gain access to know-how that one business might be missing. For instance, one business might have exceptional marketing and distribution channels however does not have a streamlined production center. By partnering with a company that has a well-established manufacturing process, both entities benefit greatly. Another reason JVs are popular is the fact here that businesses share expenses and risks when embarking on a joint venture. This makes the collaboration more attractive as both parties would share the expense of labour and advertising, and they both gain from lower production expenses per unit by leveraging their capabilities and integrating knowledge.
Business expansion is an auspicious goal that any business owner thinks about at some time throughout their professional career, however, it can be an extremely difficult and expensive process. It is for these factors that some entrepreneurs 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 effort to maximise efficiency. For instance, a company wanting to broaden its distribution to brand-new markets and areas can benefit from partnering with regional businesses. In this manner, it can take advantage of an already existing local distribution network, not to mention having access to understanding and proficiency on the target market. Beyond this, regulations in particular jurisdictions restrict access to foreign businesses, indicating that a JV arrangement with a local entity would be the only way to gain admittance.