How a joint venture agreement can foster business development
How a joint venture agreement can foster business development
Blog Article
Similar to any other business endeavour, joint ventures have advantages and drawbacks. This post will list the most notable ones.
There's a long list of joint ventures that covers different sectors and businesses around the world, some of which have culminated in the creation of the world's most successful companies. That stated, there are various types of joint ventures and picking the right one considerably depends on the objectives of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a type of collaboration that unites two entities from different backgrounds to reach a common objective. This could be a JV between a business entity and an academic institution or short-term partnership between a businessman and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular vehicle for expansion as these bring together 2 entities that co-exist in the same supply chain like buyers and suppliers, and they provide increased growth chances for both parties.
For years, joint ventures in international business have culminated in mutually helpful outcomes, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are many reasons companies enter joint ventures however perhaps the most important of which is to take advantage of resources and gain access to proficiency that one company might be missing out on. For example, one company might have excellent marketing and distribution channels however lacks a streamlined production hub. By partnering with a company that has a well-established manufacturing process, both entities benefit considerably. Another reason why click here JVs are popular is the fact that companies share costs and risks when embarking on a joint venture. This makes the collaboration more attractive as both parties would share the expense of labour and marketing, and they both benefit from lower production expenses per unit by leveraging their capabilities and combining knowledge.
Company growth is an auspicious goal that any business owner considers at some point during their career, nevertheless, it can be a really demanding and costly procedure. It is for these reasons that some businessmen go with joint ventures when trying to get into brand-new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can greatly increase the possibilities of success as partners pool their resources and connections in an effort to increase effectiveness. For example, a business wishing to broaden its distribution to new markets and areas can take advantage of partnering with local players. This way, it can benefit from an already existing local distribution network, not to mention having access to understanding and know-how on the target audience. Beyond this, regulations in particular jurisdictions restrict access to foreign businesses, suggesting that a JV contract with a local entity would be the only way to gain admittance.
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