Just how a joint venture agreement can foster company growth

Much like any other business endeavour, joint ventures have advantages and downsides. This post will note the most notable ones.

There's a long list of joint ventures that covers different sectors and companies around the world, some of which more info have culminated in the development of the world's most successful businesses. That said, there are different types of joint ventures and selecting the right one considerably 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 combines 2 entities from different backgrounds to reach a shared objective. This could be a JV between an industrial entity and a university or short-term collaboration in between an entrepreneur and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular vehicle for growth as these combine two entities that co-exist in the very same supply chain like buyers and wholesellers, and they offer increased development opportunities for both parties.

For years, joint ventures in international business have actually culminated in equally advantageous outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are lots of reasons why businesses go into joint ventures however perhaps the most important of which is to leverage resources and access knowledge that one business might be missing out on. For example, one company may have exceptional marketing and circulation channels but does not have a structured manufacturing hub. By partnering with a business that has a well-established manufacturing process, both entities benefit greatly. Another reason JVs are popular is the fact that companies share expenses and risks when embarking on a joint venture. This makes the partnership more attractive as both parties would share the expense of labour and advertising, and they both take advantage of lower production costs per unit by leveraging their capabilities and combining expertise.

Business growth is an auspicious objective that any entrepreneur considers at some point during their career, however, it can be an extremely demanding and costly procedure. It is for these factors that some business people choose joint ventures when attempting to break into brand-new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can significantly increase the possibilities of success as partners pool their resources and connections in an effort to maximise efficiency. For instance, a business wishing to expand its distribution to brand-new markets and territories can gain from partnering with local players. In this manner, it can benefit from a currently existing local distribution network, not to mention having access to knowledge and know-how on the target market. Beyond this, regulations in particular jurisdictions limit access to foreign companies, indicating that a JV contract with a regional entity would be the only method to gain access.