Why strategic alliances are necessary to business expansion

Why strategic alliances are necessary to business expansion

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Just like any other business endeavour, joint ventures have advantages and disadvantages. This post will list the most noteworthy ones.

For decades, joint ventures in international business have actually culminated in equally advantageous results, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are lots of reasons companies go into joint ventures however perhaps the most crucial of which is to click here take advantage of resources and access expertise that one company might be missing. For example, one business may have exceptional marketing and distribution channels but lacks a structured production hub. By partnering with a business that has a reputable 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 partnership more appealing as both entities would share the cost of labour and marketing, and they both take advantage of lower production costs per unit by leveraging their capabilities and integrating knowledge.

There's a long list of joint ventures that covers various sectors and businesses around the world, some of which have culminated in the development of the world's most successful companies. That said, there are different types of joint ventures and choosing the ideal one considerably depends on the goals of the entities included and the nature of their respective organisations. For instance, project-based joint ventures are a kind of partnership that brings together two entities from different backgrounds to reach a common objective. This could be a JV between a commercial 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 means for expansion as these combine 2 entities that co-exist in the exact same supply chain like buyers and suppliers, and they provide increased development chances for both parties involved.

Company growth is an ambitious goal that any entrepreneur considers at some time throughout their career, however, it can be an extremely stressful and costly process. It is for these reasons that some businessmen choose joint ventures when trying to break 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 effort to increase performance. For example, a company wanting to broaden its distribution to new markets and areas can benefit from partnering with regional businesses. This way, it can take advantage of a currently existing local distribution network, not to mention having access to understanding and know-how on the target audience. Beyond this, regulations in certain jurisdictions limit access to foreign businesses, implying that a JV agreement with a local entity would be the only method to gain access.

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