Exactly why strategic alliances are vital to business expansion

Exactly why strategic alliances are vital to business expansion

Blog Article

Understanding when to start a joint venture and who to do it with is important. More about this below.

There's a long list of joint ventures that spans various sectors and companies across the globe, a few of which have actually culminated in the creation of the world's most successful companies. That stated, there are different types of joint ventures and choosing the best one significantly depends upon the goals of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a type of partnership that brings together 2 entities from various backgrounds to reach a shared goal. This could be a JV between a commercial entity and an academic institution or short-term partnership between an entrepreneur and a 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 two entities that co-exist in the same supply chain like buyers and vendors, and they provide increased development chances for both parties involved.

Business expansion is an auspicious objective that any business owner thinks about at some point during their professional career, however, it can be an extremely demanding and expensive process. It is for these factors that some business people choose joint ventures when attempting to break into new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can considerably increase the opportunities of success as partners pool their resources and connections in an attempt to maximise performance. For example, a business wanting to broaden its distribution to new markets and areas can benefit from partnering with local businesses. This way, it can benefit from an already existing regional distribution network, not to mention having access to knowledge and know-how on the target audience. Beyond this, policies in specific jurisdictions limit access to foreign businesses, suggesting that a JV arrangement with a local entity would be the only way to gain access.

For years, joint ventures in international business have actually culminated in mutually helpful outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are numerous reasons click here businesses go into joint ventures however perhaps the most essential of which is to leverage resources and gain access to knowledge that one business might be missing out on. For instance, one company might have outstanding marketing and distribution channels but lacks a structured manufacturing center. By partnering with a company that has a reputable production process, both entities benefit considerably. Another reason why JVs are popular is the truth that businesses share costs and risks when embarking on a joint venture. This makes the partnership more attractive as both entities would share the cost of labour and advertising, and they both gain from lower production costs per unit by leveraging their abilities and integrating knowledge.

Report this page