Just how a joint venture agreement can promote business growth

Just how a joint venture agreement can promote business growth

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Joint ventures can be beneficial to companies looking to broaden to new markets and territories. Keep on reading for more information.

For decades, 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 good example on this. There are numerous reasons companies go into joint ventures but possibly the most crucial of which is to leverage resources and gain access to know-how that one company might be missing out on. For example, one business may have outstanding marketing and distribution channels however lacks a streamlined production hub. By partnering with a business that has a well-established production process, both entities benefit significantly. Another reason why JVs are popular is the fact 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 marketing, and they both gain from lower production expenses per unit by leveraging their abilities and combining knowledge.

Business growth is an ambitious objective that any entrepreneur considers at some point throughout their professional career, nevertheless, it can be an extremely stressful and costly procedure. It is for these reasons that some business people go with joint ventures when trying to break into new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can greatly increase the opportunities of success as partners pool their resources and connections in an attempt to maximise efficiency. For example, a business wanting to expand its distribution to brand-new markets and areas can benefit from partnering with regional businesses. By doing this, it can gain from a currently existing regional distribution network, not to mention having access to knowledge and know-how on the target audience. Beyond this, guidelines in specific jurisdictions limit access to foreign companies, implying that a JV agreement with a regional entity would be the only read more way to gain access.

There's a long list of joint ventures that spans different sectors and businesses across the globe, some of which have culminated in the development of the world's most successful companies. That stated, there are various types of joint ventures and picking the ideal one considerably depends on the objectives of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a type of collaboration that combines two entities from different backgrounds to reach a shared objective. This could be a JV between an industrial entity and an academic institution or short-term partnership in between a business person and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular vehicle for growth as these unite two entities that co-exist in the same supply chain like buyers and vendors, and they provide increased growth chances for both parties involved.

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