Similar to any other commercial endeavour, joint ventures have advantages and disadvantages. This post will list the most noteworthy ones.
Company growth is an ambitious goal that any business owner considers at some point throughout their career, nevertheless, it can be a very demanding and expensive process. It is for these reasons that some businessmen opt for 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 greatly increase the opportunities of success as partners pool their resources and connections in an drive to maximise efficiency. For instance, a company wanting to expand its distribution to new markets and territories more info can take advantage of partnering with local businesses. By doing this, it can take advantage of a currently existing local distribution network, not to mention having access to knowledge and know-how on the target audience. Beyond this, policies in particular jurisdictions restrict access to foreign companies, meaning that a JV arrangement with a regional entity would be the only way to gain access.
There's a long list of joint ventures that spans various sectors and companies across the globe, 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 choosing the best one considerably depends upon the objectives of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a type of partnership that unites two entities from different backgrounds to reach a shared objective. This could be a JV between a commercial entity and an academic institution 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 likewise another popular means for expansion as these unite 2 entities that co-exist in the very same supply chain like buyers and wholesellers, and they provide increased growth chances for both parties involved.
For years, joint ventures in international business have culminated in mutually helpful results, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are lots of reasons companies go into joint ventures but perhaps the most important of which is to take advantage of resources and access proficiency that one business may be missing out on. For instance, one business might have excellent marketing and circulation channels but lacks a streamlined production hub. By partnering with a company that has a reputable production process, both entities benefit greatly. Another reason why JVs are popular is the fact that companies share costs and risks when starting a joint venture. This makes the collaboration more attractive as both entities would share the cost of labour and marketing, and they both gain from lower production expenses per unit by leveraging their capabilities and combining knowledge.