A quick guide to joint ventures you need to read through

A quick guide to joint ventures you need to read through

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There are different joint venture approaches, each fit for a particular function. Here's all you need to know.

Business expansion is an auspicious goal that any business owner considers at some point during their professional career, nevertheless, it can be a very difficult and pricey process. It is for these factors that some entrepreneurs opt for joint ventures when trying to break into brand-new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can considerably increase the possibilities of success as partners pool their resources and connections in an attempt to maximise effectiveness. For example, a business wanting to expand its distribution to brand-new markets and territories can gain from partnering with regional businesses. This way, it can take advantage of an already existing regional distribution network, not to mention having access to understanding and expertise on the target market. Beyond this, policies in specific jurisdictions limit access to foreign companies, implying that a JV agreement with a local entity would be the only way to gain admittance.

There's a long list of joint ventures that covers various sectors and businesses around the world, a few here of which have culminated in the creation of the world's most successful businesses. That said, there are different types of joint ventures and picking the ideal one considerably depends upon the goals of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a type of collaboration that unites two entities from various backgrounds to reach a shared objective. This could be a JV between a commercial entity and an academic institution or short-term partnership in between a businessman and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular means for expansion as these combine 2 entities that co-exist in the very same supply chain like buyers and vendors, and they offer increased development opportunities 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 good example on this. There are numerous reasons why companies go into joint ventures but perhaps the most important of which is to leverage resources and access know-how that one company may be missing out on. For example, one business may have outstanding marketing and distribution channels however does not have a streamlined manufacturing center. By partnering with a company that has a well-established production process, both entities benefit greatly. Another reason why JVs are popular is the truth that companies share costs and risks when embarking on a joint venture. This makes the partnership more enticing as both entities would share the expense of labour and advertising, and they both gain from lower production expenses per unit by leveraging their abilities and integrating knowledge.

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