How a joint venture agreement can promote business growth

Just like any other commercial endeavour, joint ventures have advantages and drawbacks. This post will note the most notable ones.

There's a long list of joint ventures that spans various sectors and businesses 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 choosing the right one greatly depends upon the objectives of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a kind of partnership that combines 2 entities from different backgrounds to reach a common objective. This could be a JV between a commercial entity and an academic institution or short-term collaboration in between a businessman 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 two entities that co-exist in the very same supply chain like buyers and suppliers, and they provide increased growth chances for both parties.

For years, joint ventures in international business have culminated in mutually helpful outcomes, and entities such as Geely and Concordium's recent joint venture is a fine example on this. There are lots of reasons businesses enter joint ventures but possibly the most important of which is to leverage resources and access know-how that one business may be missing. For example, one business might have outstanding marketing and circulation channels but does not have a structured production center. By partnering with a company that has a well-established production process, both entities benefit considerably. Another reason JVs are popular is the reality that companies share expenses and risks when embarking on a joint venture. This makes the collaboration more appealing as both parties would share the cost of labour and marketing, and they both take advantage of lower production costs per unit by leveraging their abilities and combining expertise.

Company growth is an auspicious objective that any entrepreneur considers at some time throughout their career, nevertheless, it can be an extremely stressful and expensive procedure. It is for these factors that some business owners go with joint ventures when trying to get into brand-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 increase efficiency. For example, a business wishing to broaden its distribution to new markets and areas can gain from partnering with local players. This way, it can gain from a currently existing regional distribution network, not to mention having access to knowledge and know-how on the target audience. Beyond this, policies in specific jurisdictions restrict access to foreign businesses, suggesting that a JV agreement with a regional entity would be the . only method to gain access.