Exactly why strategic alliances are vital to company expansion

Exactly why strategic alliances are vital to company expansion

Blog Article

Knowing when to embark on a joint venture and who to do it with is important. More about this below.

Company expansion is an ambitious objective that any entrepreneur thinks about at some time during their professional career, nevertheless, it can be an extremely difficult and expensive procedure. It is for these reasons that some businessmen opt for 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 significantly increase the possibilities of success as partners pool their resources and connections in an attempt to increase performance. For example, a business wanting to expand its distribution to new markets and areas can gain from partnering with regional businesses. In this manner, it can take advantage of an already existing local distribution network, not to mention having access to understanding and expertise on the target audience. Beyond this, policies in specific jurisdictions restrict access to foreign companies, suggesting that a JV arrangement with a regional entity would be the only method to gain admittance.

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 important of which is to take advantage of resources and gain access to knowledge that one company may be missing out on. For example, one company might have outstanding marketing and distribution channels however does not have a structured production center. By partnering with a company that has a well-established manufacturing process, both entities benefit greatly. Another reason JVs are popular is the fact that companies share costs and risks when starting a joint venture. This makes the partnership more appealing as both entities would share the expense of labour and marketing, and they both gain from lower production expenses per unit by leveraging their abilities and integrating knowledge.

There's a long list of joint ventures that spans various sectors and companies around the world, a few of which have actually culminated in the creation of the world's most prosperous businesses. That said, there are various types of joint ventures and selecting the ideal one considerably depends upon the goals of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a kind of collaboration that unites 2 entities from various backgrounds to reach a shared goal. 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 website ventures are likewise another popular means for expansion as these combine two entities that co-exist in the exact same supply chain like buyers and wholesellers, and they provide increased growth opportunities for both parties involved.

Report this page