Understanding when to embark on a joint venture and who to do it with is important. More about this below.
There's a long list of joint ventures that spans various sectors and companies across the globe, some of which have culminated in the development of the world's most successful businesses. That said, there are different types of joint ventures and picking the best 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 partnership that unites two entities from various backgrounds to reach a shared goal. This could be a JV in between an industrial 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 unite two entities that co-exist in the exact same supply chain like buyers and wholesellers, and they offer increased growth opportunities for both parties.
Company growth is an auspicious objective that any business owner thinks about at some time throughout their professional career, nevertheless, it can be a very difficult and pricey procedure. It is for these reasons that some businessmen go with joint ventures when attempting to break into brand-new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can greatly here increase the opportunities of success as partners pool their resources and connections in an effort to increase performance. For instance, a company wishing to expand its distribution to new markets and areas can gain from partnering with local businesses. By doing this, it can gain from a currently existing local distribution network, not to mention having access to understanding and know-how on the target market. Beyond this, guidelines in particular jurisdictions restrict access to foreign companies, suggesting that a JV contract with a local entity would be the only method to gain access.
For years, joint ventures in international business have culminated in equally helpful outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are numerous reasons why businesses go into joint ventures but perhaps the most crucial of which is to leverage resources and access knowledge that one company might be missing out on. For example, one company might have outstanding marketing and circulation channels but lacks a structured manufacturing center. By partnering with a company that has a reputable production process, both entities benefit considerably. Another reason JVs are popular is the fact that companies share expenses and risks when starting a joint venture. This makes the collaboration more enticing as both parties would share the cost of labour and advertising, and they both take advantage of lower production expenses per unit by leveraging their abilities and combining expertise.