Understanding when to start a joint venture and who to do it with is crucial. More about this listed below.
Company growth is an ambitious goal that any entrepreneur considers at some point during their career, nevertheless, it can be a really demanding and costly process. It is for these reasons that some business owners choose joint ventures when attempting 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 possibilities of success as partners pool their resources and connections in an drive to maximise performance. For instance, a company wanting to broaden its distribution to new markets and territories can take advantage of partnering with regional businesses. By doing this, it can benefit from a currently existing local distribution network, not to mention having access to understanding and expertise on the target market. Beyond this, policies in particular jurisdictions restrict access to foreign . companies, meaning that a JV arrangement with a local entity would be the only method to gain access.
There's a long list of joint ventures that covers various sectors and businesses across the globe, some of which have actually culminated in the creation of the world's most prosperous companies. That stated, there are various types of joint ventures and selecting the best 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 collaboration that brings together two entities from different backgrounds to reach a common objective. This could be a JV in between a business entity and an academic institution or short-term partnership between a businessman and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular vehicle for growth as these combine 2 entities that co-exist in the very same supply chain like buyers and suppliers, and they offer increased development opportunities for both parties involved.
For decades, joint ventures in international business have culminated in equally beneficial outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are many reasons companies enter joint ventures however potentially the most crucial of which is to take advantage of resources and access proficiency that one business may be missing out on. For example, one company may have excellent marketing and distribution channels but does not have a streamlined production center. By partnering with a company that has a well-established manufacturing process, both entities benefit considerably. Another reason JVs are popular is the fact that companies share costs and risks when embarking on a joint venture. This makes the collaboration more enticing as both entities 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.