Knowing when to embark on a joint venture and who to do it with is essential. A lot more about this below.
For decades, joint ventures in international business have culminated in mutually helpful outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are numerous reasons companies enter joint ventures however potentially the most essential of which is to take advantage of resources and gain access to competence that one business may be missing out on. For example, one business may have excellent marketing and circulation channels but lacks a structured manufacturing hub. By partnering with a company that has a well-established production process, both entities benefit greatly. Another reason why JVs are popular is the reality that businesses share expenses and risks when starting a joint venture. This makes the partnership more attractive 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 capabilities and combining knowledge.
There's a long list of joint ventures that covers different sectors and businesses across the globe, a few of which have culminated in the creation of the world's most successful companies. That said, . there are different types of joint ventures and picking the best one greatly depends on the objectives of the entities included and the nature of their respective organisations. For example, project-based joint ventures are a kind of collaboration that unites two entities from various backgrounds to reach a common objective. This could be a JV between a commercial entity and a university or short-term partnership between an entrepreneur and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular vehicle for expansion as these combine 2 entities that co-exist in the same supply chain like buyers and vendors, and they provide increased growth chances for both parties involved.
Business growth is an ambitious goal that any entrepreneur thinks about at some point during their professional career, however, it can be a very difficult and costly procedure. It is for these factors that some businessmen choose joint ventures when attempting to get into 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 increase efficiency. For instance, a company wanting to broaden its distribution to brand-new markets and areas can gain from partnering with regional businesses. This way, it can benefit from an already existing local distribution network, not to mention having access to knowledge and know-how on the target market. Beyond this, policies in particular jurisdictions limit access to foreign businesses, suggesting that a JV arrangement with a local entity would be the only way to gain admittance.