Understanding when to start a joint venture and who to do it with is vital. More about this below.
There's a long list of joint ventures that spans various sectors and businesses around the world, a few of which have actually culminated in the development of the world's most prosperous companies. That stated, there are different types of joint ventures and picking the best one considerably depends on the objectives here of the entities included and the nature of their respective organisations. For instance, project-based joint ventures are a kind of collaboration that unites two entities from various backgrounds to reach a shared goal. This could be a JV in between an industrial entity and a university or short-term partnership in between an entrepreneur and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular means for expansion as these combine two entities that co-exist in the same supply chain like buyers and wholesellers, and they provide increased development chances for both parties involved.
For years, joint ventures in international business have culminated in equally beneficial results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are many reasons why companies enter joint ventures however possibly the most important of which is to take advantage of resources and access know-how that one business may be missing. For example, one company might have outstanding marketing and distribution channels but does not have a streamlined manufacturing hub. By partnering with a business that has a well-established production process, both entities benefit significantly. Another reason JVs are popular is the truth that businesses share costs and risks when starting a joint venture. This makes the collaboration more attractive as both entities would share the expense of labour and marketing, and they both gain from lower production costs per unit by leveraging their abilities and combining expertise.
Business expansion is an ambitious objective that any business owner thinks about at some point during their career, however, it can be a really demanding and expensive process. It is for these reasons that some business owners choose joint ventures when attempting to get into brand-new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can considerably increase the chances of success as partners pool their resources and connections in an effort to maximise efficiency. For example, a business wishing to broaden its distribution to brand-new markets and territories can take advantage of partnering with regional businesses. This way, 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 certain jurisdictions restrict access to foreign companies, suggesting that a JV agreement with a local entity would be the only method to gain access.