Why strategic alliances are essential to business growth
Why strategic alliances are essential to business growth
Blog Article
Understanding when to embark on a joint venture and who to do it with is important. A lot more about this below.
There's a long list of joint ventures that spans different sectors here and businesses across the globe, a few of which have culminated in the development of the world's most successful businesses. That said, there are various types of joint ventures and selecting the best 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 type of collaboration that brings together 2 entities from various backgrounds to reach a common objective. This could be a JV between a business entity and a university or short-term collaboration 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 expansion as these bring together two entities that co-exist in the same supply chain like buyers and wholesellers, and they offer increased growth chances for both parties.
Business growth is an ambitious goal that any entrepreneur thinks about at some time throughout their professional career, nevertheless, it can be a very difficult and pricey procedure. It is for these factors that some business people choose 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 considerably increase the chances of success as partners pool their resources and connections in an effort to maximise performance. For instance, a business wishing to broaden its distribution to new markets and territories can gain from partnering with regional players. By doing this, it can benefit from an already existing regional distribution network, not to mention having access to understanding and expertise on the target audience. Beyond this, guidelines in certain jurisdictions restrict access to foreign businesses, meaning that a JV arrangement with a regional entity would be the only method to gain admittance.
For decades, joint ventures in international business have actually culminated in equally beneficial results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are lots of reasons businesses go into joint ventures however potentially the most important of which is to take advantage of resources and gain access to expertise that one business may be missing out on. For example, one company may have excellent marketing and distribution channels however does not have a streamlined production hub. By partnering with a business that has a well-established production process, both entities benefit greatly. Another reason why JVs are popular is the fact that businesses share costs and risks when embarking on a joint venture. This makes the partnership more appealing as both entities 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.
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