How a joint venture agreement can foster business development
How a joint venture agreement can foster business development
Blog Article
Just like any other commercial endeavour, joint ventures have advantages and disadvantages. This post will list the most noteworthy ones.
For decades, joint ventures in international business have culminated in mutually helpful results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are numerous reasons why businesses go into joint ventures however potentially the most important of which is to leverage resources and gain access to competence that one business may be missing . out on. For example, one company may have outstanding marketing and circulation channels however does not have a streamlined manufacturing center. By partnering with a company that has a reputable manufacturing process, both entities benefit significantly. Another reason why JVs are popular is the fact that businesses share expenses and risks when starting a joint venture. This makes the partnership more attractive as both parties would share the cost of labour and marketing, and they both take advantage of lower production expenses per unit by leveraging their abilities and combining expertise.
Company growth is an auspicious goal that any business owner considers at some time throughout their career, nevertheless, it can be a very stressful and expensive procedure. It is for these reasons that some business owners go with joint ventures when attempting to get into new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can considerably increase the chances of success as partners pool their resources and connections in an effort to maximise efficiency. For example, a company wanting to broaden its distribution to new markets and territories can gain from partnering with local players. In this manner, it can benefit from an already existing local distribution network, not to mention having access to knowledge and know-how on the target market. Beyond this, policies in specific jurisdictions restrict access to foreign companies, implying that a JV agreement with a regional entity would be the only way to gain access.
There's a long list of joint ventures that covers different sectors and businesses across the globe, some of which have actually culminated in the creation of the world's most successful companies. That stated, there are various types of joint ventures and choosing the ideal one significantly depends upon the goals of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a kind of collaboration that brings together 2 entities from various backgrounds to reach a common goal. This could be a JV between a business entity and an academic institution or short-term collaboration in between a business person 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 bring together two entities that co-exist in the exact same supply chain like buyers and suppliers, and they provide increased development opportunities for both parties.
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