There are different joint venture approaches, each suitable for a specific function. Here is all you need to know.
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 creation of the world's most successful companies. That said, there are various types of joint ventures and choosing the best one greatly depends upon the goals of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a kind of collaboration that unites 2 entities from different backgrounds to reach a shared objective. This could be a JV between an industrial entity and an academic institution or short-term partnership between a businessman and a federal government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular vehicle for growth as these combine 2 entities that co-exist in the exact same supply chain like buyers and wholesellers, and they provide increased growth chances for both parties.
Company expansion is an auspicious objective that any entrepreneur considers at some point during their professional career, however, it can be an extremely demanding and expensive procedure. It is here for these reasons that some entrepreneurs choose joint ventures when attempting to get into new markets and areas. 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 effort to maximise efficiency. For instance, a business wanting to expand its distribution to new markets and areas can gain from partnering with regional businesses. By doing this, it can gain from an already existing local distribution network, not to mention having access to knowledge and expertise on the target audience. Beyond this, policies in certain jurisdictions limit access to foreign companies, indicating that a JV agreement with a regional entity would be the only way to gain access.
For years, joint ventures in international business have culminated in mutually advantageous results, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are many reasons companies enter joint ventures but possibly the most essential of which is to leverage resources and gain access to proficiency that one business might be missing out on. For instance, one business might have outstanding marketing and circulation channels but does not have a streamlined production center. By partnering with a company that has a reputable production process, both entities benefit significantly. Another reason why JVs are popular is the fact that businesses share costs and risks when starting a joint venture. This makes the collaboration more appealing as both entities would share the cost of labour and advertising, and they both take advantage of lower production costs per unit by leveraging their abilities and combining expertise.