Much like any other business endeavour, joint ventures have advantages and drawbacks. This post will note the most noteworthy ones.
There's a long list of joint ventures that covers various sectors and companies around the world, a few of which have actually culminated in the development of the world's most prosperous businesses. That said, there are different types of joint ventures and selecting the right one greatly depends on 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 unites 2 entities from various backgrounds to reach a shared objective. This could be a JV in between an industrial entity and an academic institution or short-term collaboration between a business person and a federal 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 2 entities that co-exist in the same supply chain like buyers and suppliers, and they provide increased growth opportunities for both parties.
For years, joint ventures in international business have culminated in equally advantageous outcomes, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are lots of reasons companies enter joint ventures but potentially the most important of which is website to leverage resources and gain access to know-how that one business may be missing. For example, one business may have excellent marketing and circulation channels however lacks a structured manufacturing center. By partnering with a business that has a well-established production 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 partnership more enticing as both entities would share the cost of labour and advertising, and they both benefit from lower production expenses per unit by leveraging their abilities and combining expertise.
Company expansion is an auspicious objective that any business owner thinks about at some point during their professional career, nevertheless, it can be a very demanding and pricey process. It is for these reasons that some business owners opt for joint ventures when trying to get into brand-new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can greatly increase the possibilities of success as partners pool their resources and connections in an attempt to maximise effectiveness. For instance, a business wishing to expand its distribution to brand-new markets and territories can gain from partnering with regional players. In this manner, it can benefit from a currently existing regional distribution network, not to mention having access to knowledge and proficiency on the target market. Beyond this, policies in particular jurisdictions restrict access to foreign companies, meaning that a JV agreement with a regional entity would be the only method to gain admittance.