Just how a joint venture agreement can foster company growth

Just how a joint venture agreement can foster company growth

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Joint ventures can be beneficial to organisations looking to expand to new markets and territories. Carry on reading to get more information.

For years, joint ventures in international business have culminated in mutually advantageous outcomes, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are lots of reasons why companies go into joint ventures however possibly the most crucial of which is to leverage resources and gain access to competence that one business may be missing out on. For instance, one company may have exceptional marketing and circulation channels but lacks a streamlined production center. By partnering with a company that has a well-established manufacturing process, both entities benefit significantly. Another reason why JVs are popular is the reality that businesses share costs and risks when embarking on a joint venture. This makes the collaboration more appealing as both parties 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.

There's a long list of joint ventures that spans different sectors and companies around the world, some of which have culminated in the creation of the world's most successful companies. That said, there are different types of joint ventures and picking the ideal one significantly depends upon the objectives of the entities included and the nature of their respective organisations. For example, project-based joint ventures are a type of partnership that brings together 2 entities from different backgrounds to reach a common objective. This could be a JV in between an industrial entity and a university or short-term partnership between a businessman and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise click here another popular means for growth as these bring together two entities that co-exist in the exact same supply chain like buyers and wholesellers, and they offer increased development opportunities for both parties involved.

Business expansion is an ambitious objective that any entrepreneur thinks about at some time during their career, however, it can be an extremely difficult and costly procedure. It is for these reasons that some business owners go with joint ventures when attempting to get into new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can significantly increase the chances of success as partners pool their resources and connections in an attempt to increase effectiveness. For example, a company wanting to broaden its distribution to new markets and territories can gain from partnering with local players. This way, it can benefit from a currently existing local distribution network, not to mention having access to knowledge and proficiency on the target audience. Beyond this, regulations in certain jurisdictions limit access to foreign businesses, indicating that a JV arrangement with a regional entity would be the only way to gain access.

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