Why strategic alliances are important to company growth
Why strategic alliances are important to company growth
Blog Article
Similar to any other business endeavour, joint ventures have advantages and downsides. This post will list the most notable ones.
Company growth is an auspicious objective here that any entrepreneur considers at some time during their professional career, however, it can be a very demanding and costly procedure. It is for these factors that some business owners choose 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 considerably increase the possibilities of success as partners pool their resources and connections in an attempt to maximise performance. For example, a business wishing to broaden its distribution to new markets and areas can take advantage of partnering with local players. This way, it can gain from an already existing local distribution network, not to mention having access to understanding and expertise on the target audience. Beyond this, guidelines in particular jurisdictions restrict access to foreign companies, indicating that a JV contract with a local entity would be the only way to gain admittance.
For years, 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 good example on this. There are numerous reasons why companies go into joint ventures however potentially the most important of which is to take advantage of resources and access know-how that one business might be missing out on. For example, one business might have exceptional marketing and distribution channels however does not have a streamlined manufacturing center. By partnering with a company that has a well-established production process, both entities benefit greatly. Another reason why JVs are popular is the reality that businesses share expenses and risks when starting a joint venture. This makes the collaboration more attractive as both entities would share the cost of labour and marketing, and they both benefit from lower production costs per unit by leveraging their abilities and combining expertise.
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 prosperous businesses. That stated, there are different types of joint ventures and choosing the best one considerably depends on the goals of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a kind of collaboration that combines two entities from various backgrounds to reach a shared goal. This could be a JV between a commercial entity and a university 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 likewise another popular means for expansion as these unite 2 entities that co-exist in the very same supply chain like buyers and wholesellers, and they offer increased growth chances for both parties.
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