Exactly why strategic alliances are important to business growth

Exactly why strategic alliances are important to business growth

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Joint ventures can be beneficial to companies looking to expand to brand-new markets and areas. Continue reading to get more information.

For decades, joint ventures in international business have actually culminated in mutually beneficial results, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are numerous reasons companies enter joint ventures but possibly the most important of which is to take advantage of resources and access competence that one business might be missing out on. For instance, one company might have outstanding marketing and circulation channels but lacks a streamlined production center. By partnering with a business that has a well-established production process, both entities benefit . greatly. Another reason why JVs are popular is the reality that businesses share expenses and risks when embarking on a joint venture. This makes the collaboration more attractive as both entities would share the expense of labour and marketing, and they both benefit from lower production costs per unit by leveraging their capabilities and combining knowledge.

Company growth is an ambitious objective that any entrepreneur considers at some time throughout their career, nevertheless, it can be a really stressful and expensive procedure. It is for these reasons that some businessmen go with joint ventures when trying 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 chances of success as partners pool their resources and connections in an attempt to increase performance. For example, a company wishing to expand its distribution to new markets and territories can gain from partnering with regional players. This way, it can take advantage of an already existing local distribution network, not to mention having access to understanding and know-how on the target market. Beyond this, regulations in specific jurisdictions restrict access to foreign businesses, implying that a JV arrangement with a regional entity would be the only way to gain admittance.

There's a long list of joint ventures that covers different sectors and companies across the globe, a few of which have actually culminated in the development of the world's most successful companies. That said, there are various types of joint ventures and choosing the best one considerably depends upon the objectives of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a kind of partnership that combines two entities from different backgrounds to reach a shared goal. This could be a JV in between a commercial entity and an academic institution or short-term partnership in between a businessman and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular means for growth as these bring together 2 entities that co-exist in the exact same supply chain like buyers and vendors, and they offer increased development opportunities for both parties.

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