A quick guide to joint ventures you must read through
A quick guide to joint ventures you must read through
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Similar to any other business endeavour, joint ventures have advantages and drawbacks. This post will list the most noteworthy ones.
There's a long list of joint ventures that covers different sectors and businesses across the globe, a few of which have culminated in the development of the world's most prosperous companies. That said, there are various types of joint ventures and choosing the right one greatly depends upon the objectives of the entities included and the nature of their respective organisations. For example, project-based joint ventures are a type of collaboration that brings together 2 entities from various backgrounds to reach a shared objective. This could be a JV in between a commercial entity and an academic institution or short-term collaboration between an entrepreneur and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures here are also another popular vehicle for growth as these combine 2 entities that co-exist in the very same supply chain like buyers and suppliers, and they offer increased development opportunities for both parties involved.
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 fine example on this. There are lots of reasons why businesses go into joint ventures however perhaps the most essential of which is to leverage resources and gain access to proficiency that one business might be missing out on. For instance, one business may have excellent marketing and circulation channels but does not have a streamlined production hub. By partnering with a company that has a well-established manufacturing process, both entities benefit considerably. Another reason JVs are popular is the fact that businesses share costs and risks when starting a joint venture. This makes the partnership more attractive as both entities would share the cost of labour and advertising, and they both gain from lower production expenses per unit by leveraging their capabilities and integrating expertise.
Business growth is an auspicious objective that any entrepreneur considers at some time throughout their professional career, nevertheless, it can be a very demanding and expensive procedure. It is for these reasons that some business people choose joint ventures when trying to get 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 drive to maximise performance. For example, a business wanting to broaden its distribution to brand-new markets and areas can gain from partnering with local players. This way, it can benefit from an already existing local distribution network, not to mention having access to knowledge and expertise on the target market. Beyond this, regulations in certain jurisdictions restrict access to foreign businesses, implying that a JV arrangement with a local entity would be the only method to gain admittance.
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