Why strategic alliances are vital to business expansion

Why strategic alliances are vital to business expansion

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Joint ventures can be beneficial to businesses aiming to broaden to new markets and areas. Carry on reading to learn more.

Company growth is an click here ambitious goal that any entrepreneur considers at some time during their career, however, it can be a very demanding and pricey procedure. It is for these factors that some business owners opt for joint ventures when attempting to break into new markets and territories. 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 increase performance. For example, a business wishing to broaden its distribution to brand-new markets and territories can benefit from partnering with local businesses. In this manner, it can take advantage of an already existing local distribution network, not to mention having access to knowledge and know-how on the target market. Beyond this, regulations in specific jurisdictions limit access to foreign companies, meaning that a JV agreement with a local entity would be the only method to gain admittance.

There's a long list of joint ventures that spans various sectors and businesses around the world, a few of which have culminated in the development of the world's most prosperous businesses. That stated, there are various types of joint ventures and picking the right one greatly depends upon the goals of the entities involved 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 between a commercial 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 unite 2 entities that co-exist in the very same supply chain like buyers and suppliers, and they offer increased development opportunities for both parties.

For years, joint ventures in international business have actually culminated in equally beneficial outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are many reasons companies enter joint ventures however possibly the most crucial of which is to leverage resources and access expertise that one company might be missing out on. For example, one company may have outstanding marketing and circulation channels however does not have a streamlined production hub. By partnering with a business that has a well-established production process, both entities benefit greatly. Another reason JVs are popular is the truth that businesses share costs and risks when embarking on a joint venture. This makes the partnership more enticing as both entities would share the cost of labour and advertising, and they both take advantage of lower production expenses per unit by leveraging their abilities and integrating expertise.

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