Exactly why strategic alliances are important to company growth

Exactly why strategic alliances are important to company growth

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Joint ventures can be beneficial to organisations looking to expand to new markets and areas. Keep on reading to find out more.

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

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 development of the world's most prosperous businesses. That said, there are different types of joint ventures and selecting the right one significantly depends upon the objectives of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a kind of collaboration that combines 2 entities from various backgrounds to reach a shared goal. This could be a JV between a commercial entity and an academic institution or short-term collaboration between a business owner and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular means for growth as these combine two entities that co-exist in the very same supply chain like buyers and suppliers, and they provide increased growth chances for both parties involved.

Company click here expansion is an auspicious goal that any business owner thinks about at some time throughout their career, however, it can be a really difficult and pricey procedure. It is for these reasons that some entrepreneurs opt for joint ventures when attempting to get into new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can considerably increase the possibilities of success as partners pool their resources and connections in an effort to increase efficiency. For instance, a company wanting to broaden its distribution to brand-new markets and areas can benefit from partnering with local businesses. This way, it can gain from an already existing local distribution network, not to mention having access to knowledge and expertise on the target market. Beyond this, regulations in particular jurisdictions restrict access to foreign companies, implying that a JV agreement with a local entity would be the only way to gain access.

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