Exactly why strategic alliances are essential to business growth
Exactly why strategic alliances are essential to business growth
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Understanding when to embark on a joint venture and who to do it with is crucial. More about this below.
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 said, there are various types of joint ventures and selecting the best one considerably depends on the objectives of the entities included and the nature of their respective organisations. For example, project-based joint ventures are a type of collaboration that combines two entities from various backgrounds to reach a shared goal. This could be a JV in between an industrial entity and a university or short-term collaboration in between an entrepreneur and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are website also another popular vehicle for expansion as these bring together two entities that co-exist in the same supply chain like buyers and wholesellers, and they provide increased development chances for both parties.
For decades, joint ventures in international business have culminated in mutually helpful results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are many reasons why businesses go into joint ventures but perhaps the most crucial of which is to leverage resources and access expertise that one business may be missing. For instance, one business might have exceptional marketing and circulation channels but lacks a streamlined production hub. By partnering with a company that has a reputable production process, both entities benefit significantly. Another reason why JVs are popular is the fact that businesses share expenses and risks when embarking on a joint venture. This makes the collaboration more enticing as both entities would share the expense of labour and advertising, and they both benefit from lower production expenses per unit by leveraging their abilities and combining expertise.
Business growth is an ambitious objective that any entrepreneur considers at some time throughout their career, however, it can be a very difficult and costly process. It is for these reasons that some business owners choose joint ventures when attempting to get into brand-new markets and territories. 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 increase performance. For instance, a business wishing to broaden its distribution to new markets and areas can take advantage of partnering with local players. By doing this, it can take advantage of an already existing regional distribution network, not to mention having access to understanding and know-how on the target audience. Beyond this, guidelines in certain jurisdictions limit access to foreign companies, suggesting that a JV contract with a regional entity would be the only way to gain access.
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