Why strategic alliances are essential to company expansion

Why strategic alliances are essential to company expansion

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There are various joint venture approaches, each fit for a particular purpose. Here is all you need to understand.

Business growth is an ambitious goal that any business owner considers at some point throughout their career, however, it can be an extremely demanding and costly procedure. It is for these reasons that some business owners choose joint ventures when trying to get into new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can greatly increase the chances of success as partners pool their resources and connections in an attempt to increase efficiency. For example, a company wanting to expand its distribution to brand-new markets and areas can benefit from partnering with regional players. In this manner, it can benefit from an already existing local distribution network, not to mention having access to get more info knowledge and proficiency on the target market. Beyond this, regulations in certain jurisdictions restrict access to foreign companies, meaning that a JV contract with a local entity would be the only way to gain admittance.

There's a long list of joint ventures that spans various sectors and businesses across the globe, some of which have actually culminated in the development of the world's most successful businesses. That stated, there are different types of joint ventures and picking the best one greatly depends upon the goals 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 2 entities from different backgrounds to reach a shared goal. This could be a JV in between a business entity and a university or short-term partnership between a businessman and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular means for expansion as these combine 2 entities that co-exist in the very same supply chain like buyers and suppliers, and they offer increased growth chances for both parties.

For decades, joint ventures in international business have culminated in equally helpful outcomes, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are numerous reasons businesses go into joint ventures but potentially the most essential of which is to leverage resources and gain access to proficiency that one business may be missing out on. For instance, one business may have outstanding marketing and distribution channels however lacks a streamlined production center. By partnering with a business that has a well-established manufacturing process, both entities benefit considerably. Another reason JVs are popular is the fact that companies share costs and risks when embarking on a joint venture. This makes the collaboration more enticing as both entities would share the expense of labour and advertising, and they both take advantage of lower production expenses per unit by leveraging their capabilities and integrating knowledge.

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