The significance of joint venture companies in business

Knowing when to embark on a joint venture and who to do it with is vital. A lot more about this below.

For decades, joint ventures in international business have culminated in mutually advantageous outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are numerous reasons businesses enter joint ventures but perhaps the most essential of which is to take advantage of resources and gain access to know-how that one business might be missing out on. For instance, one company may have exceptional marketing and distribution channels however does not have a structured manufacturing center. By partnering with a business that has a well-established production process, website both entities benefit significantly. Another reason why JVs are popular is the fact that businesses share costs and risks when embarking on a joint venture. This makes the collaboration more appealing as both entities would share the cost of labour and advertising, and they both gain from lower production costs per unit by leveraging their capabilities and combining expertise.

There's a long list of joint ventures that spans different sectors and businesses around the world, some of which have actually culminated in the creation of the world's most successful businesses. That said, there are various types of joint ventures and selecting the best one greatly depends upon the objectives of the entities included and the nature of their respective organisations. For example, project-based joint ventures are a type of partnership that unites 2 entities from various backgrounds to reach a shared goal. This could be a JV in between a commercial entity and a university or short-term collaboration between a business person and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular vehicle for expansion as these unite 2 entities that co-exist in the exact same supply chain like buyers and wholesellers, and they provide increased growth opportunities for both parties.

Company growth is an auspicious goal that any business owner thinks about at some time during their professional career, nevertheless, it can be an extremely stressful and expensive procedure. It is for these reasons that some business owners opt for joint ventures when attempting 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 possibilities of success as partners pool their resources and connections in an effort to maximise efficiency. For example, a company wanting to broaden its distribution to brand-new markets and territories can benefit from partnering with local businesses. In this manner, it can benefit from 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 companies, implying that a JV arrangement with a local entity would be the only way to gain access.