Why strategic alliances are vital to company growth

Why strategic alliances are vital to company growth

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There are various joint venture methods, each suitable for a particular purpose. Here is all you have to know.

There's a long list of joint ventures that covers different sectors and companies around the world, some of which have culminated in the development of the world's most successful businesses. That said, there are different types of joint ventures and choosing the right one considerably depends upon the objectives of here the entities included and the nature of their respective organisations. For example, project-based joint ventures are a kind of partnership that combines two entities from different backgrounds to reach a common goal. This could be a JV in between a business entity and a university or short-term collaboration in between a business owner 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 unite 2 entities that co-exist in the very same supply chain like buyers and suppliers, and they offer increased growth opportunities for both parties involved.

Company growth is an ambitious goal that any entrepreneur thinks about at some point during their professional career, however, it can be an extremely difficult and pricey process. It is for these reasons that some business owners opt for joint ventures when trying 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 possibilities of success as partners pool their resources and connections in an attempt to increase effectiveness. For instance, a company wishing to expand its distribution to brand-new markets and territories can benefit from partnering with local players. By doing this, it can gain from an already existing regional distribution network, not to mention having access to knowledge and know-how on the target audience. Beyond this, regulations in particular jurisdictions restrict access to foreign companies, implying that a JV arrangement with a local entity would be the only method to gain access.

For years, joint ventures in international business have actually culminated in equally beneficial results, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are numerous reasons companies go into joint ventures however potentially the most important of which is to leverage resources and access knowledge that one business might be missing. For example, one business might have outstanding marketing and distribution channels however lacks a structured production hub. By partnering with a company that has a well-established manufacturing process, both entities benefit greatly. Another reason why JVs are popular is the fact that companies share costs and risks when starting a joint venture. This makes the partnership more enticing as both parties would share the cost of labour and advertising, and they both gain from lower production costs per unit by leveraging their capabilities and integrating expertise.

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