Just how a joint venture agreement can foster business development

Just how a joint venture agreement can foster business development

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There are various joint venture techniques, each fit for a specific purpose. Here is all you have to know.

Business growth is an ambitious goal that any entrepreneur considers at some point throughout their professional career, nevertheless, it can be a very difficult and pricey procedure. It is for these reasons that some businessmen 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 considerably increase the opportunities of success as partners pool their resources and connections in an effort to maximise efficiency. For example, a business wanting to broaden its distribution to new markets and territories can benefit from partnering with regional players. This way, it can benefit from an already existing regional distribution network, not to mention having access to understanding and know-how on the target audience. Beyond this, guidelines in specific jurisdictions limit access to foreign businesses, indicating that a JV arrangement with a regional entity would be the only way to gain access.

There's a long list of joint ventures that covers different sectors and businesses across the globe, some of which have culminated in the creation of the world's most successful businesses. That stated, there are different types of joint ventures and picking the best one greatly depends on the objectives of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a kind check here of partnership that combines 2 entities from various backgrounds to reach a shared goal. This could be a JV between a commercial entity and an academic institution or short-term partnership between an entrepreneur 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 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.

For years, joint ventures in international business have culminated in equally advantageous results, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are numerous reasons companies go into joint ventures but perhaps the most crucial of which is to take advantage of resources and access expertise that one business may be missing out on. For instance, one business might have excellent marketing and distribution channels however does not have a streamlined production hub. By partnering with a company that has a reputable manufacturing process, both entities benefit considerably. Another reason why JVs are popular is the fact that businesses share costs and risks when starting a joint venture. This makes the collaboration more appealing as both parties would share the cost of labour and advertising, and they both gain from lower production costs per unit by leveraging their abilities and integrating expertise.

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