A quick guide to joint ventures you should read through

A quick guide to joint ventures you should read through

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Just like any other business endeavour, joint ventures have advantages and drawbacks. This post will note the most noteworthy ones.

There's a long list of joint ventures that covers different sectors and companies around the world, some of which have culminated in the development of the world's most successful companies. That stated, there are different types of joint ventures and selecting the right one greatly depends on the objectives of the entities included and the nature of their respective organisations. For instance, project-based joint ventures are a kind of collaboration that unites 2 entities from various backgrounds to reach a common objective. This could be a JV in between a business entity and a university or short-term collaboration in between a businessman 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 combine two entities that co-exist in the same supply chain like buyers and suppliers, and they offer increased growth chances for both parties involved.

Business growth is an auspicious goal that any business owner thinks about at some time during their career, however, it can be an extremely difficult and pricey procedure. It is for these factors that some businessmen opt for joint ventures when trying to break into brand-new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can greatly increase the chances of success as partners pool their resources and connections in an effort to increase performance. For instance, a business wanting to expand its distribution to new markets and areas can take advantage of partnering with regional players. This way, it can gain from an already existing regional distribution network, not to mention having access to understanding and know-how on the target audience. Beyond this, policies in specific jurisdictions restrict access to foreign companies, indicating that a JV arrangement with a local entity would be the only way to gain admittance.

For decades, joint ventures in international business have 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 businesses enter joint ventures but perhaps the most important of which here is to leverage resources and access proficiency that one company may be missing. For example, one business might have exceptional marketing and distribution channels but does not have a streamlined manufacturing hub. By partnering with a company that has a well-established manufacturing process, both entities benefit significantly. Another reason JVs are popular is the fact that businesses share expenses and risks when embarking on a joint venture. This makes the partnership more appealing as both entities would share the expense of labour and advertising, and they both benefit from lower production expenses per unit by leveraging their abilities and combining expertise.

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