Exactly why strategic alliances are essential to company expansion
Exactly why strategic alliances are essential to company expansion
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Knowing when to start a joint venture and who to do it with is crucial. A lot more about this below.
For years, joint ventures in international business have actually culminated in mutually beneficial results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are lots of reasons businesses go into joint ventures but possibly the most crucial of which is to leverage resources and access know-how that one company may be missing out on. For example, one company might have excellent marketing and circulation channels however lacks a streamlined production center. By partnering with a business that has a reputable production process, both entities benefit significantly. Another reason why JVs are popular is the fact that companies share expenses and risks when starting a joint venture. This makes the collaboration more appealing as both parties would share the cost of labour and marketing, and they both benefit from lower production costs per unit by leveraging their abilities and combining knowledge.
Business growth is an ambitious goal that any business owner thinks about at some point during their professional career, however, it can be a very demanding and pricey process. It is for these reasons that some business owners opt for joint ventures when trying to break into new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can greatly increase the chances of success as partners pool their resources and connections in an effort to increase efficiency. For example, a company wanting to broaden its distribution to new markets and areas can benefit from partnering with local players. In this manner, it can benefit from a currently existing local distribution network, not to mention having access to understanding and know-how on the target audience. Beyond this, regulations in particular jurisdictions restrict access to foreign companies, meaning that a JV arrangement 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 creation of the world's most prosperous companies. That stated, there are various types of joint ventures and selecting the right one significantly depends on the goals of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a kind of partnership that combines 2 entities from different backgrounds to reach a common objective. This could be a JV in between a business entity and a university or short-term partnership in between a business person 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 unite two entities that co-exist in the exact same supply chain like buyers and wholesellers, and they offer increased development opportunities for both parties.
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