Knowing when to start a joint venture and who to do it with is crucial. More about this listed below.
Company expansion is an auspicious objective that any entrepreneur considers at some time throughout their professional career, nevertheless, it can be a very stressful and pricey process. It is for these reasons that some businessmen opt for joint ventures when trying to get 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 chances of success as partners pool their resources and connections in an drive to increase performance. For example, a business wanting to broaden its distribution to brand-new markets and areas can take advantage of partnering with regional players. In this manner, it can gain from an already existing regional distribution network, not to mention having access to understanding and know-how on the target audience. Beyond this, regulations in certain jurisdictions restrict access to foreign businesses, suggesting that a JV arrangement with a regional entity would be the only way to gain admittance.
There's a long list of joint ventures that spans various sectors and businesses around the world, some of which have culminated in the development of the world's most successful businesses. That said, there are various types of joint ventures and selecting the ideal one considerably depends upon the objectives 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 shared objective. This could be a JV in between a commercial entity and a university or short-term partnership in between a businessman and a 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 same supply chain like buyers and vendors, and they provide increased growth chances for both parties.
For decades, joint ventures in international business have culminated in equally advantageous outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are numerous reasons companies go into joint ventures however possibly the most essential of which is to leverage resources and gain access to proficiency that one company might be missing out on. For example, one business may have outstanding marketing and circulation channels website but does not have a structured manufacturing hub. By partnering with a company that has a well-established production 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 collaboration more attractive as both entities would share the expense of labour and marketing, and they both benefit from lower production costs per unit by leveraging their capabilities and integrating knowledge.