Similar to any other business endeavour, joint ventures have advantages and downsides. This post will list the most notable ones.
Company growth is an ambitious goal that any entrepreneur considers at some time throughout their career, however, it can be a really demanding and costly process. It is for these factors that some business owners opt for joint ventures when attempting to break 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 attempt to maximise effectiveness. For instance, a company wishing to expand its distribution to brand-new markets and areas can take advantage of partnering with local businesses. In this manner, it can take advantage of a currently existing local distribution network, not to mention having access to understanding and know-how on the target audience. Beyond this, guidelines in certain jurisdictions restrict access to foreign businesses, indicating that a JV contract with a regional entity would be the only method to gain access.
There's a long list of joint ventures that spans different sectors and businesses around the world, a few of which have culminated in the creation of the world's most successful companies. That said, there are different types of joint ventures and choosing the ideal one significantly 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 brings together two entities from various backgrounds to reach a common goal. This could be a JV between an industrial entity and an academic institution or short-term collaboration in between an entrepreneur and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular means for growth as these combine two entities that co-exist in the very same supply chain like buyers and suppliers, and they offer increased development opportunities for both parties involved.
For decades, joint ventures in international business have actually culminated in equally advantageous outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are lots of reasons businesses enter here joint ventures however perhaps the most essential of which is to take advantage of resources and access proficiency that one company might be missing out on. For instance, one company might have exceptional marketing and distribution channels however does not have a streamlined manufacturing hub. By partnering with a company that has a reputable manufacturing process, both entities benefit significantly. Another reason JVs are popular is the fact that businesses share costs and risks when embarking on a joint venture. This makes the collaboration more enticing as both entities would share the cost of labour and marketing, and they both take advantage of lower production expenses per unit by leveraging their abilities and combining expertise.