Understanding when to start a joint venture and who to do it with is essential. A lot more about this below.
For decades, joint ventures in international business have culminated in mutually beneficial results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are many reasons why companies enter joint ventures but possibly the most crucial of which is to leverage resources and gain access to expertise that one business might be missing. For example, one company might have exceptional marketing and distribution channels however lacks a streamlined production hub. By partnering with a company that has a reputable production process, both entities benefit significantly. Another reason JVs are popular is the reality that companies share costs and risks when embarking on a joint venture. This makes the partnership more enticing as both parties would share the cost of labour and advertising, and they both benefit from lower production costs per unit by leveraging their capabilities and integrating knowledge.
There's a long list of joint ventures that covers various sectors and businesses across the globe, a few of which have actually culminated in the creation of the world's most successful businesses. That said, there are different types of joint ventures and selecting the ideal one greatly depends on the goals of the entities included and the nature of their respective organisations. For example, project-based joint ventures are a kind of collaboration that combines 2 entities from various backgrounds to reach a shared goal. This could be a JV between a commercial entity and a university or short-term collaboration between a businessman and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular vehicle for expansion as these unite two entities that co-exist in the very same supply chain like buyers and wholesellers, and they offer increased growth chances for both parties involved.
Business expansion is an auspicious goal that any entrepreneur thinks about at some point throughout their career, however, it can be a very demanding and costly procedure. It is for these factors that some entrepreneurs opt for joint ventures when attempting to break into 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 attempt to maximise efficiency. For instance, a business wanting to expand its distribution to brand-new markets and areas can benefit from partnering with regional businesses. By doing this, it can benefit from an already existing local distribution network, not to mention having get more info access to knowledge and know-how on the target audience. Beyond this, regulations in particular jurisdictions restrict access to foreign businesses, implying that a JV arrangement with a local entity would be the only method to gain access.