Why strategic alliances are essential to company expansion

Much like any other business endeavour, joint ventures have advantages and downsides. This post will list the most noteworthy ones.

There's a long list of joint ventures that spans different sectors and companies across the globe, some of which have actually culminated in the creation of the . world's most successful companies. That stated, there are different types of joint ventures and choosing the right 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 2 entities from various backgrounds to reach a shared goal. This could be a JV in between an industrial entity and an academic institution or short-term collaboration in between a business person and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular means for growth as these unite two entities that co-exist in the exact same supply chain like buyers and suppliers, and they provide increased growth opportunities for both parties.

For years, joint ventures in international business have culminated in mutually helpful outcomes, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are many reasons businesses go into joint ventures but potentially the most crucial of which is to leverage resources and access proficiency that one company might be missing out on. For example, one company might have exceptional marketing and distribution channels but lacks a streamlined manufacturing hub. 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 businesses share expenses and risks when starting a joint venture. This makes the partnership more appealing as both entities would share the expense of labour and advertising, and they both gain from lower production costs per unit by leveraging their abilities and integrating expertise.

Company expansion is an auspicious objective that any entrepreneur thinks about at some time during their professional career, nevertheless, it can be an extremely stressful and costly procedure. It is for these factors that some business people opt for joint ventures when attempting to break into brand-new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can considerably increase the possibilities of success as partners pool their resources and connections in an effort to increase effectiveness. For instance, a company wishing to broaden its distribution to new markets and territories can benefit from partnering with local businesses. This way, it can gain from a currently existing local distribution network, not to mention having access to knowledge and proficiency on the target market. Beyond this, policies in certain jurisdictions limit access to foreign businesses, implying that a JV arrangement with a regional entity would be the only method to gain access.