Exactly why strategic alliances are important to company growth

Exactly why strategic alliances are important to company growth

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Just like any other commercial endeavour, joint ventures have advantages and disadvantages. This post will list the most noteworthy ones.

For decades, joint ventures in international business have actually culminated in equally helpful outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are numerous reasons why companies go into joint ventures but potentially the most essential of which is to leverage resources and gain access to competence that one business may be missing out on. For instance, one company might have exceptional marketing and distribution channels however lacks a structured manufacturing center. By partnering with a company that has a well-established manufacturing process, both entities benefit greatly. Another reason JVs are popular is the reality that businesses share costs and risks when embarking on a joint venture. This makes the partnership more enticing as both parties would share the expense of labour and marketing, and they both gain from lower get more info production costs per unit by leveraging their abilities and integrating knowledge.

Company expansion is an auspicious objective that any business owner thinks about at some time throughout their professional career, nevertheless, it can be a really stressful and expensive process. It is for these factors that some businessmen choose joint ventures when trying to get into new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can considerably increase the opportunities of success as partners pool their resources and connections in an attempt to maximise performance. For instance, a business wishing to expand its distribution to new markets and territories can gain from partnering with local players. By doing this, it can gain from an already existing regional distribution network, not to mention having access to understanding and expertise on the target audience. Beyond this, regulations in particular jurisdictions restrict access to foreign companies, implying that a JV arrangement with a local entity would be the only way to gain access.

There's a long list of joint ventures that spans different sectors and businesses across the globe, a few of which have culminated in the creation of the world's most prosperous businesses. That said, there are different types of joint ventures and selecting the right one significantly depends upon the goals of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a kind of partnership that combines two entities from various backgrounds to reach a common objective. This could be a JV between a commercial entity and a university or short-term collaboration in between an entrepreneur and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular means for expansion as these combine two entities that co-exist in the exact same supply chain like buyers and vendors, and they provide increased development chances for both parties involved.

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