Why strategic alliances are necessary to company growth

Why strategic alliances are necessary to company growth

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

Company growth is an ambitious objective that any business owner considers at some point throughout their career, however, it can be a really difficult and costly procedure. It is for these reasons that some businessmen opt for joint ventures when attempting to get into brand-new markets and territories. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can considerably increase the possibilities of success as partners pool their resources and connections in an attempt to increase effectiveness. For instance, a company wishing to expand its distribution to brand-new markets and areas can gain from partnering with local players. In this manner, it can gain from a currently existing regional distribution network, not to mention having access to understanding and expertise on the target audience. Beyond this, policies in specific jurisdictions restrict access to foreign businesses, meaning that a JV arrangement with a local entity would be the only method to gain access.

There's a long list of joint ventures that covers various sectors and companies across the globe, some of which have actually culminated in the development of the world's most prosperous businesses. That said, there are various types of joint ventures and selecting the ideal one greatly depends on the objectives of the entities included and the nature of their respective organisations. For instance, project-based joint ventures are a type of partnership that combines 2 entities from different backgrounds to reach a common objective. This could be a JV between an industrial entity and a university or short-term partnership in between a business person and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular means for growth as these unite 2 entities that co-exist in the same supply chain like buyers and suppliers, and they provide 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 more info is a good example on this. There are many reasons businesses enter joint ventures but potentially the most crucial of which is to leverage resources and gain access to knowledge that one company may be missing out on. For instance, one company may have exceptional marketing and circulation channels however lacks a structured production hub. By partnering with a company that has a reputable manufacturing process, both entities benefit considerably. Another reason JVs are popular is the truth that companies share expenses and risks when starting a joint venture. This makes the collaboration more attractive as both entities would share the cost of labour and marketing, and they both benefit from lower production costs per unit by leveraging their capabilities and integrating expertise.

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