Joint ventures can be beneficial to organisations aiming to expand to new markets and territories. Continue reading to learn more.
There's a long list of joint ventures that spans various sectors and companies around the world, a few of which have culminated in the development of the world's most successful companies. That said, there are various types of joint ventures and selecting the right one significantly depends upon the goals of the entities included and the nature of their respective organisations. For example, project-based joint ventures are a type of partnership that brings together two entities from various backgrounds to reach a shared goal. This could be a JV between a business entity and a university or short-term collaboration in between a business owner and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular means for expansion as these combine 2 entities that co-exist in the very same supply chain like buyers and suppliers, and they offer increased growth opportunities for both parties.
For decades, joint ventures in international business have culminated in mutually beneficial outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are numerous reasons why businesses enter joint ventures but possibly the most crucial of which is to take advantage of resources and access competence that one business may be missing. For instance, one business might have outstanding marketing and circulation channels but lacks a streamlined manufacturing hub. By partnering with a company that has a reputable manufacturing process, both entities benefit significantly. Another reason JVs are popular is the reality that businesses share expenses and risks when embarking on a joint venture. This makes the partnership more appealing as both entities would share the cost of labour and marketing, and they both gain from lower production expenses per unit by leveraging their capabilities and combining expertise.
Company expansion is an auspicious goal that any business owner thinks about at some point during their career, however, it can be a really difficult and costly procedure. It is for these reasons that some entrepreneurs opt for joint ventures when attempting to break into new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can greatly increase the possibilities of success as partners pool their resources and connections in an effort to maximise performance. For example, a company wanting to broaden its distribution to brand-new markets and areas can gain from partnering with regional players. This way, it can take advantage of a currently existing local distribution network, not to mention having access to understanding and expertise on the target market. Beyond this, guidelines in website certain jurisdictions restrict access to foreign companies, meaning that a JV agreement with a regional entity would be the only method to gain admittance.