Exactly why strategic alliances are necessary to business growth

Exactly why strategic alliances are necessary to business growth

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There are various joint venture approaches, each suitable for a specific function. Here's all you need to understand.

There's a long list of joint ventures that spans various sectors and businesses around the world, 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 right one considerably depends on the objectives of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a type of partnership that unites 2 entities from various backgrounds to reach a common goal. This could be a JV in between a business entity and an academic institution or short-term collaboration in between a businessman and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular means for growth as these combine two entities that co-exist in the very same supply chain like buyers and wholesellers, and they provide increased growth chances for both parties.

For decades, joint ventures in international business have actually culminated in equally beneficial outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are many reasons why businesses enter joint ventures however perhaps the most crucial of which is to leverage resources and access know-how that one business may be missing. For instance, one company might have outstanding marketing and distribution channels however does not have a structured manufacturing hub. By partnering with a business that has a well-established manufacturing process, both entities benefit greatly. Another reason why JVs are popular is the truth that companies share costs and risks when embarking on a joint venture. This makes the partnership more enticing as both parties would share the cost of labour and advertising, and they both take advantage of lower production expenses per unit by leveraging their capabilities and combining knowledge.

Company expansion is an ambitious goal that any entrepreneur thinks about at some time during their career, however, it can be a really stressful and costly procedure. It is for these reasons that some business people opt for joint ventures when attempting to get into brand-new markets and areas. 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 attempt to maximise effectiveness. For example, a business wishing to broaden its distribution to brand-new markets and areas can benefit from partnering with regional businesses. By doing this, it can benefit from an already existing local distribution network, not to mention having access to understanding and know-how on the target market. Beyond this, guidelines in particular jurisdictions website limit access to foreign companies, meaning that a JV contract with a regional entity would be the only way to gain access.

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