Knowing when to embark on a joint venture and who to do it with is crucial. A lot more about this below.
Business expansion is an ambitious goal that any business owner thinks about at some time during their career, however, it can be a very difficult and costly process. It is for these reasons that some business owners go with joint ventures when attempting to break into new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can significantly increase the possibilities of success as partners pool their resources and connections in an attempt to maximise efficiency. For instance, a business wanting to broaden its distribution to brand-new markets and territories can benefit from partnering with regional players. In this manner, it can take advantage of an already existing regional distribution network, not to mention having access to understanding and proficiency on the target market. Beyond this, policies in particular jurisdictions limit access to foreign businesses, suggesting that a JV contract with a read more regional entity would be the only method to gain admittance.
There's a long list of joint ventures that covers various sectors and companies across the globe, some of which have culminated in the creation of the world's most successful companies. That said, there are various types of joint ventures and picking the right one considerably 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 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 a university or short-term partnership in between an entrepreneur and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular means for growth as these bring together two entities that co-exist in the exact same supply chain like buyers and vendors, and they provide increased development opportunities 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 numerous reasons why businesses go into joint ventures however possibly the most important of which is to leverage resources and access know-how that one company may be missing. For example, one company may have outstanding marketing and distribution channels but lacks a structured production hub. By partnering with a business that has a reputable manufacturing process, both entities benefit considerably. Another reason why JVs are popular is the reality that businesses share expenses and risks when starting a joint venture. This makes the collaboration more appealing as both entities would share the expense of labour and marketing, and they both benefit from lower production expenses per unit by leveraging their capabilities and integrating knowledge.