Much like any other commercial endeavour, joint ventures have advantages and drawbacks. This post here will note the most noteworthy ones.
Business growth is an ambitious objective that any business owner thinks about at some point during their career, nevertheless, it can be an extremely demanding and costly process. It is for these reasons that some entrepreneurs choose joint ventures when trying to get 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 effort to increase efficiency. For example, a company wanting to expand its distribution to brand-new markets and territories can gain from partnering with regional businesses. In this manner, it can take advantage of an already existing local distribution network, not to mention having access to understanding and proficiency on the target market. Beyond this, regulations in particular jurisdictions restrict access to foreign companies, meaning that a JV agreement with a local entity would be the only method to gain admittance.
For years, joint ventures in international business have culminated in mutually beneficial outcomes, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are many reasons companies go into joint ventures but perhaps the most crucial of which is to take advantage of resources and gain access to competence that one business might be missing. For example, one company may have excellent marketing and circulation channels however lacks a streamlined production center. By partnering with a company that has a well-established production process, both entities benefit significantly. Another reason why JVs are popular is the reality that businesses share expenses and risks when starting a joint venture. This makes the collaboration more appealing as both parties would share the expense of labour and marketing, and they both take advantage of lower production costs per unit by leveraging their abilities and combining knowledge.
There's a long list of joint ventures that spans various sectors and businesses around the world, a few of which have culminated in the development of the world's most prosperous companies. That said, there are different types of joint ventures and choosing the right one significantly 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 brings together two entities from various backgrounds to reach a shared objective. This could be a JV in between a business entity and a university or short-term partnership in 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 combine 2 entities that co-exist in the very same supply chain like buyers and suppliers, and they provide increased growth chances for both parties involved.