Exactly why strategic alliances are important to company growth

Exactly why strategic alliances are important to company growth

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Knowing when to embark on a joint venture and who to do it with is essential. More about this below.

There's a long list of joint ventures that spans various sectors and companies around the world, a few of which have actually culminated in the development of the world's most successful companies. That stated, there are various types of joint ventures and picking the ideal one greatly depends upon the objectives of the entities included and the nature of their respective organisations. For instance, project-based joint ventures are a type of collaboration that combines two entities from various backgrounds to reach a shared goal. This could be a JV in between a business entity and an academic institution or short-term partnership between a business owner 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 two entities that co-exist in the same supply chain like buyers and suppliers, and they offer increased growth chances for both parties.

For years, joint ventures in international business have culminated in equally advantageous results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are numerous reasons companies go into joint ventures but potentially the most important of which is to take advantage of resources and access knowledge that one business may be missing out on. For example, one business might have exceptional marketing and circulation channels however lacks a streamlined production center. By partnering with a business that has a reputable manufacturing process, both entities benefit greatly. Another reason why JVs are popular is click here the fact that businesses share costs and risks when embarking on a joint venture. This makes the collaboration more enticing as both parties would share the expense of labour and marketing, and they both take advantage of lower production costs per unit by leveraging their capabilities and integrating expertise.

Business expansion is an auspicious goal that any business owner thinks about at some point throughout their career, nevertheless, it can be a very demanding and costly procedure. It is for these reasons that some entrepreneurs go with 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 greatly increase the opportunities of success as partners pool their resources and connections in an attempt to increase efficiency. For instance, a company wanting to broaden its distribution to new markets and territories can gain from partnering with local businesses. By doing this, it can benefit from an already existing local distribution network, not to mention having access to knowledge and expertise on the target audience. Beyond this, regulations in specific jurisdictions restrict access to foreign businesses, indicating that a JV agreement with a local entity would be the only way to gain admittance.

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