Why strategic alliances are essential to company growth

Why strategic alliances are essential to company growth

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There are different joint venture approaches, each fit for a particular purpose. click here Here's all you need to understand.

For years, joint ventures in international business have culminated in equally beneficial results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are many reasons why companies enter joint ventures however potentially the most important of which is to leverage resources and gain access to proficiency that one business may be missing out on. For example, one company might have outstanding marketing and distribution channels however does not have a streamlined production hub. By partnering with a business that has a well-established manufacturing process, both entities benefit considerably. Another reason why JVs are popular is the reality that companies share costs and risks when embarking on a joint venture. This makes the partnership more appealing as both entities would share the expense of labour and marketing, and they both take advantage of lower production costs per unit by leveraging their abilities and combining expertise.

Company growth is an auspicious objective that any entrepreneur considers at some time throughout their professional career, however, it can be an extremely stressful and expensive procedure. It is for these factors that some businessmen opt for joint ventures when attempting to get into brand-new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can considerably increase the opportunities of success as partners pool their resources and connections in an attempt to increase effectiveness. For example, a business wanting to expand its distribution to brand-new markets and territories can take advantage of partnering with local players. By doing this, it can benefit from a currently existing regional distribution network, not to mention having access to knowledge and know-how on the target audience. Beyond this, policies in particular jurisdictions limit access to foreign companies, indicating that a JV arrangement with a regional entity would be the only method to gain access.

There's a long list of joint ventures that spans various sectors and companies across the globe, some of which have culminated in the development of the world's most prosperous companies. That said, there are different types of joint ventures and picking the ideal one greatly depends upon the objectives of the entities included and the nature of their respective organisations. For instance, project-based joint ventures are a kind of collaboration that unites 2 entities from different backgrounds to reach a common objective. This could be a JV in between a commercial entity and a university or short-term collaboration in between an entrepreneur and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular means for expansion as these combine 2 entities that co-exist in the same supply chain like buyers and wholesellers, and they offer increased growth chances for both parties involved.

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