Just how a joint venture agreement can promote company growth

Just how a joint venture agreement can promote company growth

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Knowing when to embark on a joint venture and who to do it with is vital. More about this listed below.

For decades, 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 many reasons businesses enter joint ventures however possibly the most crucial of which is to take advantage of resources and gain access to know-how that one business may be missing. For instance, one company may have exceptional marketing and circulation channels however lacks a streamlined production hub. By partnering with a business that has a reputable production process, both entities benefit greatly. Another reason JVs are popular is the reality that companies share costs and risks when embarking on a joint venture. This makes the collaboration more enticing as both entities would share the expense of labour and advertising, and they both gain from lower website production costs per unit by leveraging their capabilities and integrating knowledge.

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 development of the world's most successful businesses. That stated, there are various types of joint ventures and selecting the right one greatly depends upon 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 various backgrounds to reach a shared goal. This could be a JV between a commercial 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 unite 2 entities that co-exist in the very same supply chain like buyers and wholesellers, and they provide increased growth opportunities for both parties involved.

Company growth is an ambitious objective that any business owner considers at some point during their career, however, it can be a very difficult and pricey process. It is for these factors that some businessmen choose joint ventures when trying to get into brand-new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can significantly increase the opportunities of success as partners pool their resources and connections in an effort to maximise efficiency. For example, a company wishing to expand its distribution to brand-new markets and territories can gain from partnering with regional businesses. This way, it can benefit from an already existing regional distribution network, not to mention having access to knowledge and know-how on the target market. Beyond this, policies in particular jurisdictions limit access to foreign businesses, implying that a JV arrangement with a regional entity would be the only method to gain access.

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