Exactly why strategic alliances are vital to company growth

Exactly why strategic alliances are vital to company growth

Blog Article

Much like any other commercial endeavour, joint ventures have advantages and disadvantages. This post will list the most noteworthy ones.

Company growth is an ambitious objective that any business owner thinks about at some point during their professional career, however, it can be a really stressful and expensive process. It is for these reasons that some entrepreneurs go with joint ventures when attempting to get into brand-new markets and areas. 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 effectiveness. For example, a business wanting to broaden its distribution to brand-new markets and territories can gain from partnering with regional businesses. This way, it can benefit from a currently existing local distribution network, not to mention having access to knowledge and proficiency on the target audience. Beyond this, regulations in specific jurisdictions limit access to foreign companies, meaning that a JV agreement with a regional entity would be the only method to gain access.

There's a long list of joint ventures that covers various sectors and companies around the world, a few of which have actually culminated in the development of the world's most successful businesses. That stated, there are various types of joint ventures and picking the ideal one considerably depends on the goals of the entities included and the nature of their respective organisations. For instance, project-based joint ventures are a kind of collaboration that brings together 2 entities from different backgrounds to reach a shared goal. This could be a JV in between an industrial entity and an academic institution or short-term partnership 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 vehicle for expansion as these bring together 2 entities that co-exist in the very same supply chain like buyers and wholesellers, and they offer increased growth opportunities for both parties involved.

For years, joint ventures in international business have culminated in mutually advantageous outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are many reasons why companies go into joint ventures but possibly the most crucial of which is to take advantage of resources and gain access to know-how that one company may be missing. For instance, one company may have outstanding marketing and distribution channels but lacks a streamlined production hub. By partnering with a business that has a well-established 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 partnership more enticing as both parties would share the expense of labour and advertising, and they check here both gain from lower production costs per unit by leveraging their capabilities and integrating knowledge.

Report this page