Just like any other business endeavour, joint ventures have advantages and downsides. This post will list the most notable ones.
There's a long list of joint ventures that spans different sectors and businesses around the website world, some of which have actually culminated in the development of the world's most prosperous businesses. That said, there are various types of joint ventures and selecting the right one significantly depends on the goals of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a kind of collaboration that brings together 2 entities from different backgrounds to reach a common goal. This could be a JV between an industrial entity and an academic institution or short-term collaboration between a business person 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 same supply chain like buyers and suppliers, and they offer increased development opportunities for both parties involved.
Business growth is an ambitious objective that any business owner considers at some point throughout their career, however, it can be an extremely demanding and pricey process. It is for these reasons that some business owners go with joint ventures when attempting to get into brand-new markets and territories. 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 increase efficiency. For example, a business wishing to broaden its distribution to brand-new markets and territories can gain from partnering with regional players. This way, it can gain from an already existing local distribution network, not to mention having access to knowledge and proficiency on the target audience. Beyond this, guidelines in certain jurisdictions restrict access to foreign businesses, suggesting that a JV agreement with a regional entity would be the only method to gain access.
For years, joint ventures in international business have culminated in equally advantageous outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are numerous reasons companies go into joint ventures but perhaps the most crucial of which is to leverage resources and gain access to proficiency that one company might be missing. For instance, one company may have exceptional marketing and circulation channels however does not have a structured manufacturing center. By partnering with a business that has a reputable production process, both entities benefit significantly. Another reason JVs are popular is the truth that companies share expenses and risks when embarking on a joint venture. This makes the partnership more enticing as both parties would share the expense of labour and marketing, and they both gain from lower production costs per unit by leveraging their abilities and integrating knowledge.