How a joint venture agreement can promote company development
Understanding when to start a joint venture and who to do it with is crucial. More about this below.
Business growth is an auspicious objective that any entrepreneur thinks about at some point throughout their career, however, it can be a really stressful and pricey process. It is for these reasons that some business people opt for joint ventures when trying to get into 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 drive to increase effectiveness. For instance, a business wishing to broaden its distribution to new markets and territories can gain from partnering with regional businesses. In this manner, it can benefit from a currently existing local distribution network, not to mention having access to understanding and proficiency on the target audience. Beyond this, guidelines in specific jurisdictions limit access to foreign businesses, implying that a JV contract with a regional entity would be the only method to gain admittance.
For decades, joint ventures in international business have actually culminated in mutually helpful results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are many reasons why companies enter joint ventures but possibly the most important of which is to leverage resources and access competence that one business might be missing out on. For instance, one business may have exceptional marketing and distribution channels however lacks a streamlined manufacturing hub. By partnering with a company that has a well-established production process, both entities benefit greatly. Another reason JVs are popular is the truth that companies share expenses and risks when embarking on a joint venture. This makes the collaboration more enticing as both entities would share the expense of labour and marketing, and they both take advantage of lower production expenses per unit by leveraging their abilities and integrating knowledge.
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 prosperous businesses. That said, there are different types of joint ventures and picking the right one greatly depends upon the goals 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 various backgrounds to reach a shared goal. This could be a JV between a commercial entity and a university or short-term collaboration in between a businessman and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular vehicle for growth as these unite 2 entities website that co-exist in the same supply chain like buyers and wholesellers, and they offer increased development opportunities for both parties involved.