Exactly why strategic alliances are important to company growth

Exactly why strategic alliances are important to company growth

Blog Article

Much like any other commercial endeavour, joint ventures have advantages and drawbacks. This post will list the most noteworthy ones.

Company growth is an auspicious objective that any entrepreneur thinks about at some time during their career, however, it can be an extremely stressful and pricey procedure. It is for these factors that some entrepreneurs choose 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 greatly increase the possibilities of success as partners pool their resources and connections in an attempt to maximise performance. For instance, a company wanting to broaden its distribution to brand-new markets and areas can gain from partnering with regional players. In this manner, it can benefit from an already existing local distribution network, not to mention having access to understanding and know-how on the target audience. Beyond this, policies in specific jurisdictions restrict access to foreign companies, suggesting that a JV agreement with a local entity would be the only method to gain admittance.

There's a long list of joint ventures that spans different sectors and businesses across the globe, a few of which have culminated in the creation of the world's most successful companies. That stated, there are different types of joint ventures and choosing the ideal one significantly depends on the goals of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a kind of partnership that combines two entities from various backgrounds to reach a shared objective. This could be a JV between an industrial entity and an academic institution or short-term collaboration in between a business owner and a federal 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 2 entities that co-exist in the exact same supply chain like buyers and suppliers, and they provide increased growth opportunities for both parties involved.

For decades, joint ventures in international business have actually culminated in equally beneficial outcomes, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are many reasons why businesses enter joint ventures but potentially the most important of which is to take advantage of resources and access knowledge that one company might be missing. For instance, one business may have excellent marketing and distribution channels but lacks a structured manufacturing hub. By partnering with a company that has a well-established manufacturing process, both entities benefit greatly. Another reason JVs are popular is the reality that companies share costs and risks when starting a joint venture. This makes the partnership more attractive as both parties would share the cost of labour and marketing, and they both gain from lower production expenses per unit by leveraging website their capabilities and combining knowledge.

Report this page