The value of joint venture companies in business

The value of joint venture companies in business

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There are different joint venture approaches, each suitable for a particular purpose. Here is all you have to understand.

Company expansion is an auspicious objective that any business owner considers at some time throughout their professional career, nevertheless, it can be a really demanding and pricey process. It is for these reasons that some entrepreneurs 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 chances of success as partners pool their resources and connections in an attempt to increase efficiency. For instance, a company wanting to expand its distribution to brand-new markets and territories can take advantage of partnering with local players. This way, it can benefit from an already existing local distribution network, not to mention having access to knowledge and know-how on the target audience. Beyond this, guidelines in certain jurisdictions limit access to foreign companies, meaning that a JV arrangement with a local entity would be the only way to gain access.

For decades, 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 many reasons companies enter joint ventures but possibly the most important of which is to take advantage of resources and gain access to know-how that one company might be missing. For instance, one business might have exceptional marketing and distribution channels but lacks a structured manufacturing hub. By partnering with a business that has a reputable manufacturing process, both entities benefit significantly. Another reason JVs are popular is the fact that companies share expenses and risks when embarking on a joint venture. This makes the collaboration more attractive as both entities would share the expense of labour and marketing, and they both gain from lower production expenses per unit by leveraging their capabilities and combining expertise.

There's a long list of joint ventures that covers various sectors and companies around the world, a few of which have culminated in the creation of the world's most prosperous businesses. That stated, there are different types of joint ventures and picking the ideal one significantly depends on the goals of the entities included and the nature of their respective organisations. For example, project-based joint here ventures are a type of partnership that combines 2 entities from various backgrounds to reach a common goal. This could be a JV between an industrial entity and an academic institution or short-term partnership between an entrepreneur and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular means for growth as these bring together two entities that co-exist in the same supply chain like buyers and vendors, and they provide increased development chances for both parties.

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