Why strategic alliances are vital to company expansion
Why strategic alliances are vital to company expansion
Blog Article
Similar to any other business endeavour, joint ventures have advantages and disadvantages. This post will note the most noteworthy ones.
Business expansion is an ambitious goal that any business owner thinks about at some point throughout their professional career, nevertheless, it can be a really stressful and expensive process. It is for these factors that some business owners opt for joint ventures when trying to break into new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can greatly increase the chances of success as partners pool their resources and connections in an effort to increase effectiveness. For instance, a business wishing to expand its distribution to new markets and areas can take advantage of partnering with local businesses. By doing this, it can benefit from an already existing regional distribution network, not to mention having access to knowledge and proficiency on the target market. Beyond this, policies in particular jurisdictions restrict access to foreign businesses, indicating that a JV arrangement with a local entity would be the only method to gain access.
There's a long list of joint ventures that spans different sectors and companies around the world, a few of which have culminated in the creation of the world's most successful businesses. That stated, there are different types of joint ventures and picking the best one considerably 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 partnership that brings together two entities from different backgrounds to reach a shared goal. This could be a JV between a commercial entity and website an academic institution or short-term partnership between a business owner and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular vehicle for growth as these bring together 2 entities that co-exist in the same supply chain like buyers and wholesellers, and they provide increased growth opportunities for both parties.
For decades, joint ventures in international business have actually culminated in mutually beneficial outcomes, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are lots of reasons why companies enter joint ventures however perhaps the most crucial of which is to take advantage of resources and access knowledge that one business may be missing. For instance, one business might have excellent marketing and distribution channels however does not have a structured production hub. By partnering with a company that has a well-established manufacturing process, both entities benefit considerably. Another reason why JVs are popular is the truth that businesses share costs and risks when starting a joint venture. This makes the collaboration more enticing as both entities would share the cost of labour and advertising, and they both take advantage of lower production expenses per unit by leveraging their capabilities and combining expertise.
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