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 essential. More about this below.
Business expansion is an auspicious goal that any entrepreneur thinks about at some point during their professional career, however, it can be a really demanding and costly process. It is for these reasons that some business people choose joint ventures when attempting to break into new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can considerably increase the possibilities of success as partners pool their resources and connections in an effort to maximise effectiveness. For instance, a business wishing to broaden its distribution to brand-new markets and territories can benefit from partnering with regional businesses. This way, it can take advantage of a currently existing local distribution network, not to mention having access to knowledge and proficiency on the target audience. Beyond this, regulations in specific jurisdictions restrict access to foreign companies, implying that a JV agreement with a regional entity would be the only way to gain admittance.
There's a long list of joint ventures that spans different sectors and businesses around the world, a few of which have culminated in the creation of the world's most prosperous businesses. That said, there are various types of joint ventures and choosing the right one greatly 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 objective. This could be a JV in between a business entity and an academic institution or short-term collaboration in between a business person and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular vehicle for growth as these combine 2 entities that co-exist in the same supply more info chain like buyers and vendors, and they offer increased development chances for both parties.
For decades, joint ventures in international business have culminated in equally helpful results, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are numerous reasons why companies enter joint ventures but possibly the most crucial of which is to take advantage of resources and access competence that one business might be missing. For example, one business may have excellent marketing and circulation channels but does not have a streamlined production center. By partnering with a business that has a well-established manufacturing process, both entities benefit greatly. Another reason JVs are popular is the fact that businesses share expenses and risks when starting a joint venture. This makes the collaboration more attractive as both parties would share the expense of labour and advertising, and they both benefit from lower production expenses per unit by leveraging their capabilities and integrating knowledge.
Report this page