Knowing when to embark on a joint venture and who to do it with is important. More about this below.
For decades, joint ventures in international business have actually culminated in mutually beneficial outcomes, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are lots of reasons why companies enter joint ventures however perhaps the most essential of which is to leverage resources and access know-how that one business may be missing out on. For instance, one business may have excellent marketing and distribution channels however lacks a streamlined production center. By partnering with a business that has a well-established production process, both entities benefit significantly. Another reason 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 entities would share the cost of labour and advertising, and they both take advantage of lower production costs per unit by leveraging their capabilities and integrating expertise.
There's a long list of joint ventures that spans different sectors and companies around the world, some of which have actually culminated in the development of the world's most successful companies. That stated, there are different types of joint ventures and selecting 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 collaboration that combines 2 entities from different backgrounds to reach a shared goal. This could be a JV in between a commercial entity and an academic institution or short-term collaboration between a businessman and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular vehicle for expansion . as these unite 2 entities that co-exist in the very same supply chain like buyers and vendors, and they offer increased growth chances for both parties involved.
Business expansion is an ambitious goal that any business owner thinks about at some point throughout their professional career, however, it can be a very difficult and expensive process. It is for these factors that some businessmen go with joint ventures when attempting to break into new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can considerably increase the opportunities of success as partners pool their resources and connections in an effort to increase performance. For example, a business wishing to expand its distribution to brand-new markets and areas can gain from partnering with regional players. By doing this, it can gain from an already existing local distribution network, not to mention having access to understanding and know-how on the target audience. Beyond this, policies in specific jurisdictions limit access to foreign businesses, indicating that a JV agreement with a regional entity would be the only way to gain admittance.