Exactly why strategic alliances are vital to company growth

Exactly why strategic alliances are vital to company growth

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Just like any other business endeavour, joint ventures have advantages and drawbacks. This post will list the most noteworthy ones.

There's a long list of joint ventures that spans various sectors and businesses across the globe, a few of which have culminated in the creation of the world's most prosperous companies. That said, there are different types of joint ventures and selecting the ideal one significantly depends upon the objectives of the entities included and the nature of their respective organisations. For example, project-based joint ventures are a type of partnership that unites two entities from various backgrounds to reach a common goal. This could be a JV between a commercial entity and a university or short-term partnership in between an entrepreneur 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 bring together 2 entities that co-exist in the same supply chain like buyers and vendors, and they provide increased growth opportunities for both parties involved.

For decades, joint ventures in international business have culminated in equally beneficial results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are lots of reasons why businesses enter joint ventures however potentially the most essential of which is to click here leverage resources and access knowledge that one business may be missing. For instance, one business might have exceptional marketing and circulation channels but does not have a streamlined manufacturing hub. By partnering with a company that has a reputable production process, both entities benefit considerably. Another reason why JVs are popular is the reality that businesses share expenses and risks when starting a joint venture. This makes the collaboration more enticing as both entities would share the cost of labour and advertising, and they both benefit from lower production expenses per unit by leveraging their capabilities and combining expertise.

Company growth is an ambitious goal that any business owner considers at some time throughout their professional career, nevertheless, it can be an extremely stressful and costly process. It is for these factors that some business people opt for 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 opportunities of success as partners pool their resources and connections in an attempt to increase effectiveness. For example, a business wanting to expand its distribution to new markets and territories can gain from partnering with regional businesses. This way, it can benefit from an already existing local distribution network, not to mention having access to knowledge and know-how on the target audience. Beyond this, regulations in particular jurisdictions limit access to foreign companies, indicating that a JV agreement with a regional entity would be the only method to gain admittance.

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