The value of joint venture companies in commerce

The value of joint venture companies in commerce

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Joint ventures can be beneficial here to companies looking to broaden to new markets and areas. Continue reading to learn more.

For decades, joint ventures in international business have actually culminated in equally beneficial results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are numerous reasons businesses go into joint ventures but perhaps the most crucial of which is to leverage resources and access knowledge that one company may be missing. For instance, one business might have exceptional marketing and distribution channels however does not have a streamlined manufacturing hub. By partnering with a company that has a well-established production process, both entities benefit considerably. Another reason JVs are popular is the truth that companies share costs and risks when starting a joint venture. This makes the collaboration more enticing as both parties would share the cost of labour and marketing, and they both gain from 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 companies around the world, some of which have culminated in the development of the world's most prosperous businesses. That said, there are various types of joint ventures and selecting the right one considerably depends on the goals of the entities included and the nature of their respective organisations. For example, project-based joint ventures are a type of collaboration that combines 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 partnership in between an entrepreneur and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular means for expansion as these bring together two entities that co-exist in the very same supply chain like buyers and vendors, and they provide increased development opportunities for both parties involved.

Business growth is an auspicious goal that any entrepreneur thinks about at some point throughout their career, nevertheless, it can be a very stressful and costly process. It is for these factors that some entrepreneurs opt for joint ventures when trying to get 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 opportunities of success as partners pool their resources and connections in an effort to increase performance. For instance, a company wishing to expand its distribution to new markets and territories can benefit from partnering with local businesses. This way, it can benefit from an already existing local distribution network, not to mention having access to knowledge and proficiency on the target audience. Beyond this, policies in specific jurisdictions restrict access to foreign companies, suggesting that a JV arrangement with a local entity would be the only method to gain admittance.

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