Knowing when to embark on a joint venture and who to do it with is crucial. More about this below.
For years, 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 companies go into joint ventures however perhaps the most important of which is to take advantage of resources and gain access to competence that one company may be missing. For instance, one business might have exceptional marketing and distribution channels but lacks a streamlined manufacturing center. By partnering with a company that has a reputable manufacturing process, both entities benefit significantly. Another reason JVs are popular is the fact that businesses share costs and risks when starting a joint venture. This makes the collaboration more attractive as both parties would share the expense of labour and advertising, and they both take advantage of lower production costs per unit by leveraging their abilities and integrating expertise.
There's a long list of joint ventures that covers various sectors and companies around the world, some of which have actually culminated in the creation of the world's most successful businesses. That stated, there are various types of joint ventures and selecting the ideal one greatly depends on the goals of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a type of collaboration that unites 2 entities from various backgrounds to reach a common goal. This could be a JV check here in between a business entity and an academic institution or short-term partnership in between a businessman and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular means for expansion as these unite 2 entities that co-exist in the very same supply chain like buyers and wholesellers, and they offer increased growth chances for both parties.
Company expansion is an auspicious goal that any business owner thinks about at some point throughout their career, however, it can be a really stressful and pricey procedure. It is for these factors that some business people 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 opportunities of success as partners pool their resources and connections in an effort to maximise effectiveness. For example, a company wanting to expand its distribution to new markets and areas can take advantage of partnering with local players. This way, it can gain from an already existing regional distribution network, not to mention having access to knowledge and expertise on the target market. Beyond this, regulations in specific jurisdictions restrict access to foreign businesses, implying that a JV contract with a local entity would be the only method to gain access.