Why strategic alliances are necessary to company growth

Knowing when to start a joint venture and who to do it with is vital. A lot more about this listed below.

Company growth is an ambitious goal that any business owner thinks about at some time throughout their professional career, however, it can be an extremely difficult and pricey procedure. It is for these factors that some business owners 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 greatly increase the chances of success as partners pool their resources and connections in an attempt to increase performance. For instance, a company wishing to expand its distribution to brand-new markets and areas can benefit from partnering with local players. In this manner, it can take advantage of a currently existing regional distribution network, not . to mention having access to understanding and proficiency on the target audience. Beyond this, policies in particular jurisdictions limit access to foreign companies, implying that a JV agreement with a local entity would be the only way to gain admittance.

For decades, joint ventures in international business have actually culminated in mutually beneficial results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are lots of reasons why companies enter joint ventures however perhaps the most essential of which is to take advantage of resources and access knowledge that one business might be missing. For instance, one business may have exceptional marketing and circulation channels but lacks a streamlined manufacturing hub. By partnering with a business that has a well-established manufacturing process, both entities benefit significantly. Another reason JVs are popular is the fact that companies share costs and risks when embarking on a joint venture. This makes the collaboration more appealing as both parties would share the cost of labour and marketing, and they both gain from lower production expenses per unit by leveraging their capabilities and integrating knowledge.

There's a long list of joint ventures that covers various sectors and businesses around the world, some of which have culminated in the creation of the world's most successful companies. That said, there are different types of joint ventures and choosing the right one considerably depends on the objectives of the entities included and the nature of their respective organisations. For example, project-based joint ventures are a type of partnership that brings together 2 entities from various backgrounds to reach a shared objective. This could be a JV between an industrial entity and a university or short-term partnership in 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 combine 2 entities that co-exist in the exact same supply chain like buyers and suppliers, and they provide increased development opportunities for both parties involved.