Why strategic alliances are necessary to company expansion

Why strategic alliances are necessary to company expansion

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There are various joint venture methods, each suitable for a particular function. Here's all you need to understand.

For years, joint ventures in international business have culminated in mutually beneficial 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 but possibly the most essential of which is to take advantage of resources and gain access to know-how that one company may be missing. For instance, one business may have exceptional marketing and circulation channels but lacks a streamlined production hub. By partnering with a business that has a well-established production process, both entities benefit greatly. 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 appealing as both entities would share the cost of labour and advertising, and they both benefit from lower production expenses per unit by leveraging their abilities and integrating knowledge.

Business expansion is an ambitious goal that any entrepreneur considers at some time during their career, nevertheless, it can be a really demanding and costly process. It is for these factors that some businessmen opt for joint ventures when attempting to get into new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can significantly increase the chances of success as partners pool their resources and connections in an drive to maximise efficiency. For instance, a business wishing to broaden its distribution to new markets and areas can gain from partnering with regional businesses. In this manner, it can gain from a currently existing regional distribution network, not to mention having access to understanding and know-how on the target audience. Beyond this, policies in particular jurisdictions restrict access to foreign businesses, implying that a JV agreement with a local entity would be the only way to gain access.

There's a long list of joint ventures that spans various sectors and companies across the globe, a few of which have actually culminated in the creation of the world's most successful businesses. That said, there are different types of joint ventures and choosing the best one significantly depends upon the goals of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a type of partnership that brings together 2 entities from various backgrounds to reach a shared objective. This could be a JV between a commercial entity and an academic institution or short-term collaboration in between a businessman and a federal more info government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular means for growth 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 involved.

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