Much like any other commercial endeavour, joint ventures have website advantages and drawbacks. This post will note the most noteworthy ones.
For decades, joint ventures in international business have culminated in mutually beneficial results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are lots of reasons why businesses enter joint ventures but perhaps the most important of which is to leverage resources and access competence that one business may be missing. For example, one company might have excellent marketing and distribution channels but does not have a structured production hub. By partnering with a company that has a reputable production process, both entities benefit considerably. Another reason why JVs are popular is the fact that companies share expenses and risks when embarking on a joint venture. This makes the partnership more appealing as both entities would share the expense of labour and advertising, and they both gain from lower production expenses per unit by leveraging their abilities and combining expertise.
Company expansion is an ambitious objective that any entrepreneur thinks about at some point throughout their career, however, it can be a very difficult and costly procedure. It is for these factors that some business owners opt for joint ventures when trying to break into new markets and territories. 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 effectiveness. For example, a business wishing to expand its distribution to brand-new markets and areas can take advantage of partnering with regional players. In this manner, it can gain from a currently existing local distribution network, not to mention having access to understanding and proficiency on the target audience. Beyond this, regulations in particular jurisdictions limit access to foreign companies, implying that a JV contract 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 around the world, a few of which have culminated in the creation of the world's most prosperous companies. That said, there are different types of joint ventures and picking the best one significantly depends on 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 combines two entities from different backgrounds to reach a common objective. This could be a JV in between a commercial entity and a university or short-term partnership in between a businessman 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 bring together two entities that co-exist in the same supply chain like buyers and wholesellers, and they offer increased growth opportunities for both parties.