Joint ventures can be beneficial to organisations aiming to broaden to new markets and areas. Keep on reading to learn more.
Business expansion is an auspicious goal that any entrepreneur considers at some point throughout their professional career, nevertheless, it can be a really demanding and expensive process. It is for these reasons that some business people opt for joint ventures when trying to get into brand-new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can significantly increase the chances of success as partners pool their resources and connections in an attempt to increase performance. For example, a business wanting to broaden its distribution to new markets and areas can benefit from partnering with regional businesses. In this manner, it can gain from a currently existing regional 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, meaning 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 spans various sectors and companies around the world, some of which have culminated in the development of the world's most prosperous businesses. That said, there are various types of joint ventures and selecting the best one considerably depends upon the goals of the entities involved and the nature of their respective organisations. For instance, 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 partnership between a business person and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular means for expansion as these combine 2 entities that co-exist in the exact same supply chain like buyers and suppliers, and they provide increased development chances for both parties involved.
For years, joint ventures in international business have culminated in mutually beneficial outcomes, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are numerous reasons businesses go into joint ventures however possibly the most essential of which is to leverage resources and gain access to know-how that one business might be missing out on. For instance, one company might have excellent marketing and distribution channels however does not have a structured production center. 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 expenses and risks when embarking on a joint venture. This makes the collaboration more attractive as both parties would share the cost of labour and marketing, and they both benefit from lower production costs per unit by leveraging their capabilities and integrating expertise.