Just how a joint venture agreement can foster business development

Just how a joint venture agreement can foster business development

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Joint ventures can be beneficial to businesses seeking to broaden to new markets and areas. Carry on reading to get more information.

Company expansion is an ambitious goal that any entrepreneur considers at some time during their professional career, nevertheless, it can be a very stressful and pricey procedure. It is for these reasons that some business people choose joint ventures when trying to break into brand-new markets and areas. 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 increase performance. For example, a company wishing to expand its distribution to brand-new markets and areas can take advantage of partnering with regional players. This way, it can gain from an already existing regional distribution network, not to mention having access to understanding and expertise on the target market. Beyond this, guidelines in certain jurisdictions limit access to foreign businesses, implying that a JV arrangement with a local entity would be the only method to gain admittance.

For years, joint ventures in international business have culminated in equally helpful results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are lots of reasons why companies go into joint ventures but perhaps the most crucial of which is to take advantage of resources and gain access to know-how that one business may be missing. For instance, one company might have excellent marketing and distribution channels however does not have a structured production center. By partnering with a company that has a well-established production process, both entities benefit significantly. Another reason why JVs are popular is the fact that businesses share expenses and risks when embarking on a joint venture. This makes the collaboration more attractive as both entities would share the cost of labour and advertising, and they both benefit from lower production costs per unit by leveraging their abilities and combining expertise.

There's a long list of joint ventures that spans different sectors and businesses across the globe, 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 choosing the best one considerably depends on the objectives of the entities included and the nature of their respective organisations. For example, project-based joint ventures are a type of partnership that brings together two entities from different backgrounds to reach a common goal. This could be a JV in between an industrial entity and a university or short-term partnership in between here an entrepreneur and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular means for growth as these combine two entities that co-exist in the exact same supply chain like buyers and suppliers, and they offer increased growth opportunities for both parties.

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