Similar to any other business endeavour, joint ventures have advantages and disadvantages. This post will note the most noteworthy ones.
Company expansion is an auspicious goal that any business owner considers at some time during their professional career, nevertheless, it can be a very difficult and expensive procedure. It is for these reasons that some business people opt for joint ventures when trying 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 drive to maximise effectiveness. For example, a company wishing to expand its distribution to brand-new markets and areas can gain from partnering with local players. In this manner, it can take advantage of an already more info existing local distribution network, not to mention having access to understanding and expertise on the target audience. Beyond this, guidelines in specific jurisdictions limit access to foreign businesses, meaning that a JV arrangement with a local entity would be the only way to gain access.
For years, joint ventures in international business have culminated in equally helpful results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are many reasons companies enter joint ventures however possibly the most essential of which is to take advantage of resources and access knowledge that one business might be missing. For example, one company might have excellent marketing and circulation channels however does not have a streamlined production hub. By partnering with a business that has a well-established manufacturing process, both entities benefit greatly. Another reason why JVs are popular is the reality that businesses share expenses and risks when starting a joint venture. This makes the partnership more appealing as both entities would share the cost of labour and advertising, and they both take advantage of lower production costs per unit by leveraging their capabilities and integrating knowledge.
There's a long list of joint ventures that covers different sectors and businesses across the globe, a few of which have actually culminated in the development of the world's most prosperous companies. That stated, there are different types of joint ventures and selecting the right one considerably depends on the objectives of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a kind of collaboration that brings together 2 entities from different backgrounds to reach a shared goal. This could be a JV between an industrial entity and an academic institution or short-term partnership between a business owner and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular vehicle for expansion as these bring together 2 entities that co-exist in the same supply chain like buyers and suppliers, and they provide increased growth opportunities for both parties.