Why strategic alliances are important to business growth

Why strategic alliances are important to business growth

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

For decades, joint ventures in international business have culminated in mutually advantageous outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are lots of reasons companies enter joint ventures however potentially the most crucial of which is to take advantage of resources and access knowledge that one company might be missing out on. For instance, one company may have excellent marketing and distribution channels but does not have a structured production hub. By partnering with a business that has a reputable production process, both entities benefit greatly. Another reason why JVs are popular is the fact that businesses share expenses and risks when embarking on a joint venture. This makes the collaboration more appealing as both entities would share the expense of labour and advertising, and they both take advantage of lower production costs per unit by leveraging their capabilities and integrating expertise.

There's a long list of joint ventures that covers various sectors and businesses around the world, some of which have actually culminated in the development of the world's most successful businesses. That said, there are different types of joint ventures and picking the best one greatly depends on the goals of the entities included 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 objective. This could be a JV in between an industrial entity and an academic institution or short-term collaboration between a business owner and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular vehicle for growth as these bring together two entities that co-exist in the very same supply chain like buyers and vendors, and they provide increased growth chances for both parties.

Business expansion is an ambitious goal that any entrepreneur considers at some time throughout their career, nevertheless, it can be a really demanding and costly procedure. It is for these reasons that some business owners choose joint ventures when attempting to break into brand-new markets and areas. 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 attempt to maximise efficiency. For instance, a business wishing to expand its distribution to brand-new markets and territories can benefit from partnering with regional businesses. By doing this, it can take advantage of an already existing regional distribution network, not to mention having access to knowledge and expertise on the target audience. more info Beyond this, guidelines in particular jurisdictions restrict access to foreign companies, meaning that a JV arrangement with a regional entity would be the only method to gain admittance.

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