Joint ventures can be beneficial to companies aiming to broaden to new markets and territories. Carry on here reading to find out more.
For decades, joint ventures in international business have culminated in equally advantageous results, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are numerous reasons why businesses enter joint ventures but perhaps the most crucial of which is to take advantage of resources and gain access to knowledge that one business might be missing. For instance, one business might have excellent marketing and distribution channels however lacks a streamlined manufacturing center. By partnering with a company that has a reputable manufacturing process, both entities benefit significantly. Another reason why JVs are popular is the truth that companies share costs and risks when embarking on a joint venture. This makes the partnership more appealing as both entities would share the expense of labour and advertising, and they both take advantage of lower production expenses per unit by leveraging their abilities and combining expertise.
There's a long list of joint ventures that covers various sectors and businesses across the globe, a few of which have actually culminated in the creation of the world's most prosperous companies. That stated, there are different types of joint ventures and selecting the right one greatly depends upon the objectives of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a kind of partnership that brings together two entities from different backgrounds to reach a common objective. This could be a JV in between a commercial entity and a university or short-term collaboration 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 expansion as these combine two entities that co-exist in the same supply chain like buyers and wholesellers, and they offer increased development opportunities for both parties.
Company expansion is an ambitious objective that any business owner considers at some point during their career, however, it can be a really difficult and pricey process. It is for these factors that some business people go with joint ventures when trying to get into new markets and territories. 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 drive to increase efficiency. For instance, a business wishing to expand its distribution to brand-new markets and areas can benefit from partnering with regional businesses. By doing this, it can gain from a currently existing local distribution network, not to mention having access to understanding and proficiency on the target market. Beyond this, policies in specific jurisdictions limit access to foreign businesses, implying that a JV contract with a regional entity would be the only way to gain admittance.