Exactly why strategic alliances are important to business growth

Exactly why strategic alliances are important to business growth

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

Company expansion is an auspicious goal that any entrepreneur considers at some time throughout their career, nevertheless, it can be an extremely demanding and costly procedure. It is for these reasons that some businessmen go with joint ventures when trying to get into new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can significantly increase the chances of success as partners pool their resources and connections in an attempt to increase performance. For example, a business wishing to expand its distribution to brand-new markets and territories can take advantage of partnering with regional businesses. In this manner, it can gain from a currently existing local distribution network, not to mention having access to knowledge and proficiency on the target market. Beyond this, guidelines in particular jurisdictions restrict access to foreign companies, implying that a JV agreement with a local entity would be the only method to gain admittance.

There's a long list of joint ventures that covers different sectors and companies across the globe, some of which have culminated in the creation of the world's most prosperous companies. That said, there are various types of joint ventures and choosing the right one considerably depends upon the goals of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a kind of partnership that combines two entities from different backgrounds to reach a shared goal. This could be a JV in between a business entity and a university or short-term collaboration 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 means for growth as these combine 2 entities that co-exist in the very same supply chain like buyers and vendors, and they offer increased development opportunities for both parties.

For decades, joint more info 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 lots of reasons why companies enter joint ventures however perhaps the most important of which is to leverage resources and gain access to competence that one company may be missing out on. For instance, one company may have outstanding marketing and circulation channels but lacks a streamlined production hub. By partnering with a business that has a reputable manufacturing process, both entities benefit significantly. Another reason why JVs are popular is the fact that businesses share costs and risks when embarking on a joint venture. This makes the partnership more appealing as both parties would share the cost of labour and advertising, and they both benefit from lower production expenses per unit by leveraging their abilities and integrating expertise.

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