Knowing when to start a joint venture and who to do it with is essential. More about this listed below.
For years, joint ventures in international business have culminated in equally beneficial results, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are lots of reasons companies enter joint ventures but potentially the most essential of which is to take advantage of resources and gain access to know-how that one business might be missing out on. For instance, one business may have excellent marketing and distribution channels but does not have a streamlined production hub. By . partnering with a company that has a reputable production process, both entities benefit greatly. Another reason why JVs are popular is the fact that businesses share expenses and risks when starting a joint venture. This makes the partnership more enticing as both entities would share the expense of labour and marketing, and they both gain from lower production expenses per unit by leveraging their abilities and combining expertise.
There's a long list of joint ventures that covers various sectors and companies across the globe, some of which have actually culminated in the creation of the world's most successful businesses. That stated, there are different types of joint ventures and selecting the ideal one greatly depends on the goals of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a kind of collaboration that brings together two entities from different backgrounds to reach a common goal. This could be a JV in between a commercial entity and an academic institution or short-term partnership between a business person and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular vehicle for expansion as these combine two entities that co-exist in the very same supply chain like buyers and vendors, and they offer increased growth chances for both parties involved.
Company growth is an auspicious objective that any entrepreneur considers at some point during their professional career, however, it can be a really difficult and expensive process. It is for these factors that some business owners go with joint ventures when trying to break into new markets and areas. 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 effort to increase effectiveness. For instance, a business wanting to broaden its distribution to brand-new markets and areas can benefit from partnering with regional players. This way, it can take advantage of an already existing local distribution network, not to mention having access to understanding and expertise on the target market. Beyond this, regulations in certain jurisdictions limit access to foreign businesses, indicating that a JV contract with a regional entity would be the only method to gain admittance.