Why strategic alliances are essential to business growth

Why strategic alliances are essential to business growth

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Much like any other business endeavour, joint ventures have advantages and drawbacks. This post will list the most notable ones.

Company expansion is an ambitious goal that any business owner considers at some point during their career, nevertheless, it can be a very stressful and expensive procedure. It is for these factors that some business owners opt for joint ventures when trying to break into brand-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 attempt to increase efficiency. For instance, a business wishing to broaden its distribution to new markets and areas can take advantage of partnering with local players. By doing this, it can benefit from an already existing regional distribution network, not to mention having access to understanding and know-how on the check here target market. Beyond this, regulations in certain jurisdictions limit access to foreign companies, indicating that a JV arrangement with a local entity would be the only way to gain access.

There's a long list of joint ventures that covers various sectors and companies around the world, some of which have culminated in the creation of the world's most successful companies. That stated, there are different types of joint ventures and choosing the right one greatly depends on the objectives of the entities included and the nature of their respective organisations. For instance, project-based joint ventures are a type of partnership that combines 2 entities from different backgrounds to reach a common goal. This could be a JV between a business entity and a university or short-term partnership in 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 growth as these unite 2 entities that co-exist in the same supply chain like buyers and wholesellers, and they provide increased development chances for both parties.

For years, joint ventures in international business have culminated in mutually advantageous results, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are lots of reasons why companies enter joint ventures but possibly the most essential of which is to leverage resources and access expertise that one company may be missing. For instance, one company might have excellent marketing and circulation channels however lacks a streamlined manufacturing hub. By partnering with a business that has a reputable production process, both entities benefit greatly. Another reason why JVs are popular is the reality that companies share expenses and risks when starting a joint venture. This makes the collaboration more enticing as both entities would share the expense of labour and marketing, and they both benefit from lower production expenses per unit by leveraging their abilities and combining knowledge.

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