Exactly why strategic alliances are important to business expansion

Exactly why strategic alliances are important to business expansion

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

There's a long list of joint ventures that spans various sectors and companies across the globe, some of which have culminated in the creation of the world's most successful businesses. That said, there are various types of joint ventures and selecting the right one significantly depends on the goals of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a type of collaboration that combines 2 entities from various backgrounds to reach a shared objective. This could be a JV in between an industrial entity and an academic institution or short-term collaboration in between a business person and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular means for expansion as these combine 2 entities that co-exist in the very same supply chain like buyers and suppliers, and they offer increased development opportunities for both parties involved.

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 fine example on this. There are lots of reasons why businesses go into joint ventures but perhaps the most crucial of which is to take advantage of resources and access know-how that one business may be missing out on. For instance, one company might have exceptional marketing and distribution channels however lacks a streamlined production center. By partnering with a company that has a well-established manufacturing process, both entities benefit considerably. Another reason JVs are popular is the fact that companies share costs and risks when starting a joint venture. This makes the collaboration more appealing as both entities would share the cost of labour and advertising, and they both benefit from lower production costs per unit by leveraging their abilities and combining expertise.

Company expansion is an ambitious goal that any business owner thinks about at some time get more info during their career, however, it can be a very stressful and costly process. It is for these reasons that some entrepreneurs 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 considerably increase the chances of success as partners pool their resources and connections in an drive to increase efficiency. For instance, a company wishing to expand its distribution to brand-new markets and areas can gain from partnering with regional players. In this manner, it can benefit from a currently existing local distribution network, not to mention having access to knowledge and know-how on the target audience. Beyond this, policies in certain jurisdictions restrict access to foreign companies, meaning that a JV arrangement with a regional entity would be the only way to gain admittance.

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