Just how a joint venture agreement can promote business growth

Just how a joint venture agreement can promote business growth

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There are various joint venture methods, each fit for a specific purpose. Here's all you have to understand.

For decades, joint ventures in international business have actually culminated in mutually beneficial 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 but perhaps the most essential of which is to leverage resources and gain access to expertise that one company may be missing. For instance, one business might have outstanding marketing and distribution channels but does not have a streamlined production hub. By partnering with a company that has a well-established production process, both entities benefit considerably. Another reason why JVs are popular is the truth that businesses 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 advertising, and they both benefit from lower production expenses per unit by leveraging their abilities and integrating expertise.

There's a long list of joint ventures that covers various sectors and companies across the globe, some of which have culminated in the creation of the world's most successful businesses. That said, there are various types of joint ventures and picking 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 type of partnership that brings together two entities from different backgrounds to website reach a common goal. This could be a JV between a commercial entity and an academic institution or short-term partnership between a businessman and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular vehicle for expansion as these bring together two entities that co-exist in the very same supply chain like buyers and vendors, and they offer increased development opportunities for both parties.

Company growth is an ambitious goal that any entrepreneur considers at some time throughout their career, nevertheless, it can be a really demanding and expensive process. It is for these reasons that some businessmen choose joint ventures when attempting to get into new markets and territories. 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 drive to increase performance. For instance, a business wishing to expand its distribution to new markets and areas can take advantage of partnering with local players. In this manner, it can benefit from an already existing regional distribution network, not to mention having access to understanding and proficiency on the target market. Beyond this, regulations in certain jurisdictions limit access to foreign businesses, indicating that a JV contract with a regional entity would be the only method to gain admittance.

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