Exactly why strategic alliances are important to company growth

Exactly why strategic alliances are important to company growth

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

There's a long list of joint ventures that spans various sectors and businesses around the world, a few of which have culminated in the development of the world's most successful businesses. That stated, there are different types of joint ventures and choosing the right one greatly depends upon the objectives of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a kind of partnership that unites two entities from various backgrounds to reach a common goal. This could be a JV get more info between a business entity and a university or short-term partnership between an entrepreneur 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 combine 2 entities that co-exist in the same supply chain like buyers and vendors, and they provide increased development opportunities for both parties.

For years, joint ventures in international business have culminated in equally advantageous outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are lots of reasons why businesses go into joint ventures but perhaps the most important of which is to take advantage of resources and access knowledge that one company might be missing. For example, one company may have exceptional marketing and circulation channels but lacks a structured manufacturing center. By partnering with a business that has a reputable production process, both entities benefit considerably. Another reason why JVs are popular is the truth that companies share expenses and risks when starting a joint venture. This makes the partnership more appealing as both parties would share the cost of labour and marketing, and they both benefit from lower production expenses per unit by leveraging their capabilities and integrating knowledge.

Business expansion is an ambitious goal that any entrepreneur thinks about at some time during their professional career, nevertheless, it can be a very stressful and expensive procedure. It is for these reasons that some business people go with joint ventures when attempting to break into brand-new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can greatly increase the possibilities of success as partners pool their resources and connections in an drive to increase effectiveness. For instance, a company wanting to expand its distribution to brand-new markets and territories can benefit from partnering with local players. By doing this, it can take advantage of an already existing local distribution network, not to mention having access to understanding and expertise on the target market. Beyond this, regulations in particular jurisdictions restrict access to foreign businesses, implying that a JV arrangement with a regional entity would be the only way to gain admittance.

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