Exactly why strategic alliances are vital to business growth

Exactly why strategic alliances are vital to business growth

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Joint ventures can be beneficial to companies aiming to broaden to new markets and areas. Carry on reading to find out more.

For years, joint ventures in click here international business have culminated in equally advantageous results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are many reasons why companies go into joint ventures but possibly the most crucial of which is to leverage resources and access proficiency that one business may be missing out on. For instance, one business may have outstanding marketing and circulation channels however lacks a streamlined production hub. By partnering with a company that has a well-established production process, both entities benefit significantly. Another reason JVs are popular is the fact that businesses share expenses and risks when starting a joint venture. This makes the collaboration more appealing as both parties would share the expense of labour and marketing, and they both gain from lower production costs per unit by leveraging their capabilities and integrating expertise.

There's a long list of joint ventures that spans different sectors and companies across the globe, a few of which have actually culminated in the creation of the world's most successful companies. That said, there are different types of joint ventures and choosing the right one greatly depends on the objectives of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a type of partnership that combines two entities from different backgrounds to reach a common goal. This could be a JV between an industrial entity and an academic institution 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 likewise another popular vehicle for growth as these unite two entities that co-exist in the very same supply chain like buyers and wholesellers, and they provide increased development chances for both parties.

Business growth is an ambitious goal that any business owner thinks about at some point throughout their career, however, it can be an extremely demanding and pricey process. It is for these reasons that some businessmen opt for joint ventures when trying to break into brand-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 drive to maximise efficiency. For example, a business wanting to broaden its distribution to brand-new markets and territories can benefit from partnering with local players. In this manner, it can take advantage of an already existing local distribution network, not to mention having access to understanding and proficiency on the target market. Beyond this, guidelines in specific jurisdictions limit access to foreign companies, suggesting that a JV arrangement with a regional entity would be the only method to gain admittance.

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