Why strategic alliances are vital to business expansion

Why strategic alliances are vital to business expansion

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Knowing when to start a joint venture and who to do it with is essential. A lot more about this listed below.

Company growth is an ambitious objective that any entrepreneur thinks about at some time during their professional career, however, it can be an extremely stressful and costly process. It is for these factors that some businessmen 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 greatly increase the chances of success as partners pool their resources and connections in an effort to maximise efficiency. For example, a business wishing to expand its distribution to brand-new markets and areas can take advantage of partnering with regional businesses. By doing this, it can gain from a currently existing local distribution network, not to mention having access to understanding and proficiency on the target audience. Beyond this, guidelines in particular jurisdictions restrict access to foreign companies, meaning that a JV arrangement with a local entity would be the only way to gain access.

There's a long list of joint ventures that covers different sectors and companies across the globe, a few of which have actually culminated in the creation of the world's most prosperous businesses. That stated, there are various types of joint ventures and selecting the right one significantly depends upon the objectives of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a type of partnership that combines 2 entities from various backgrounds to reach a common goal. This could be a JV in between a business entity and a university or short-term collaboration in between a business owner and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular vehicle for growth as these combine 2 entities that co-exist in the exact same supply chain like buyers and suppliers, and they offer increased development chances for both parties.

For years, joint ventures in international business have culminated in equally beneficial outcomes, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are many reasons businesses go into joint ventures but potentially the most essential of which is to leverage resources and gain access to know-how that one company might be missing out on. For example, one company may have exceptional marketing and circulation channels but does not have a streamlined production center. By partnering with a business that has a reputable manufacturing process, both entities benefit considerably. Another reason JVs are popular is the reality that companies share expenses and risks when embarking on a joint venture. This makes the partnership more appealing as both parties would share the cost of labour and marketing, and get more info they both take advantage of lower production expenses per unit by leveraging their capabilities and combining knowledge.

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