Joint ventures can be beneficial to organisations looking to expand to brand-new markets and areas. Carry on reading to find out more.
Business expansion is an auspicious objective that any entrepreneur considers at some point throughout their professional career, however, it can be an extremely stressful and pricey process. It is for these reasons that some businessmen choose joint ventures when trying to break into new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can greatly increase the opportunities of success as partners pool their resources and connections in an effort to increase efficiency. For instance, a business wanting to expand its distribution to new markets and territories can gain from partnering with regional businesses. In this manner, it can take advantage of a currently existing regional distribution network, not to mention having access to knowledge and expertise on the target market. Beyond this, policies in certain jurisdictions restrict access to foreign businesses, indicating that a JV arrangement with a local website entity would be the only method to gain admittance.
There's a long list of joint ventures that spans various sectors and companies around the world, a few 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 choosing the right one considerably depends upon the goals of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a kind of partnership that combines two entities from various backgrounds to reach a common objective. This could be a JV in between an industrial 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 vehicle for expansion as these combine two entities that co-exist in the exact same supply chain like buyers and suppliers, and they offer increased development opportunities for both parties.
For decades, joint ventures in international business have actually 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 go into joint ventures however possibly the most essential of which is to leverage resources and gain access to competence that one business might be missing. For example, one company may have exceptional marketing and distribution channels but does not have a structured production center. By partnering with a business that has a well-established manufacturing process, both entities benefit significantly. Another reason JVs are popular is the reality that businesses share expenses and risks when starting a joint venture. This makes the partnership more enticing as both entities would share the cost of labour and advertising, and they both take advantage of lower production expenses per unit by leveraging their capabilities and combining expertise.