Joint ventures can be beneficial to companies looking to broaden to brand-new markets and territories. Continue reading for more information.
Company expansion is an auspicious goal that any entrepreneur considers at some time during their professional career, however, it can be a very stressful and expensive process. It is for these factors that some business owners opt for joint ventures when trying here to get 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 possibilities of success as partners pool their resources and connections in an attempt to maximise effectiveness. For instance, a company wishing to broaden its distribution to new markets and territories can benefit from partnering with regional businesses. This way, it can gain from a currently existing regional distribution network, not to mention having access to knowledge and know-how on the target market. Beyond this, regulations in specific jurisdictions restrict access to foreign businesses, indicating that a JV contract 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, a few of which have culminated in the development of the world's most successful companies. That stated, there are different types of joint ventures and picking the right one greatly depends on the objectives of the entities included and the nature of their respective organisations. For instance, project-based joint ventures are a kind of partnership that brings together 2 entities from various backgrounds to reach a common goal. This could be a JV in between an industrial 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 likewise another popular means for expansion as these bring together 2 entities that co-exist in the exact same supply chain like buyers and wholesellers, and they offer increased development opportunities for both parties.
For years, joint ventures in international business have culminated in mutually helpful outcomes, and entities such as Geely and Concordium's recent joint venture is a good 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 expertise that one company may be missing. For instance, one company might have outstanding marketing and distribution channels but lacks a streamlined manufacturing hub. By partnering with a business that has a well-established manufacturing process, both entities benefit greatly. Another reason JVs are popular is the fact that businesses share expenses and risks when embarking on a joint venture. This makes the collaboration more appealing as both entities would share the expense of labour and advertising, and they both gain from lower production expenses per unit by leveraging their abilities and integrating knowledge.