Exactly why strategic alliances are important to company expansion

Knowing when to start a joint venture and who to do it with is essential. More about this listed below.

For decades, joint ventures in international business have culminated in mutually beneficial results, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are numerous reasons companies go into joint ventures but perhaps the most crucial of which is to leverage resources and gain access to knowledge that one business may be missing out on. For instance, one business might have excellent marketing and circulation channels however lacks a streamlined production center. By partnering with a business that has a well-established production process, both entities benefit greatly. Another reason why JVs are popular is the fact that companies share costs and risks when starting a joint venture. This makes the partnership more appealing as both entities would share the cost of labour and advertising, and they both benefit from lower production costs per unit by leveraging their abilities and integrating knowledge.

There's a long list of joint ventures that spans different sectors and businesses around the world, a few of which have culminated in the creation of the world's most successful businesses. That stated, there are different types of joint ventures and choosing the best one considerably depends upon the objectives of the entities included and the nature of their respective organisations. For instance, project-based joint ventures are a type of partnership that brings together 2 entities from various backgrounds to reach a common get more info objective. This could be a JV between an industrial entity and a university or short-term partnership in between a businessman 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 bring together 2 entities that co-exist in the same supply chain like buyers and suppliers, and they offer increased development opportunities for both parties involved.

Business expansion is an ambitious goal that any business owner thinks about at some time throughout their professional career, however, it can be a really stressful and expensive process. It is for these reasons that some business people choose joint ventures when trying to get into new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can significantly increase the opportunities of success as partners pool their resources and connections in an drive to maximise efficiency. For example, a company wanting to broaden its distribution to brand-new markets and areas can take advantage of partnering with local businesses. This way, it can benefit from an already existing local distribution network, not to mention having access to understanding and expertise on the target audience. Beyond this, regulations in specific jurisdictions restrict access to foreign businesses, meaning that a JV arrangement with a regional entity would be the only method to gain access.