A fast guide to joint ventures you must read through

A fast guide to joint ventures you must read through

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Understanding when to embark on a joint venture and who to do it with is crucial. More about this below.

For decades, joint ventures in international business have actually culminated in equally beneficial outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are numerous reasons companies go into joint ventures but potentially the most important of which is to take advantage of resources and gain access to know-how that one business may be missing out on. For instance, one company may have excellent marketing and distribution channels but lacks a structured production hub. By partnering with a business that has a well-established production process, both entities benefit considerably. Another reason JVs are popular is the truth that companies share costs and risks when embarking on a joint venture. This makes the collaboration more appealing as both entities would share the expense of labour and marketing, and they both gain from lower production costs per unit by leveraging their capabilities and combining knowledge.

Company growth is an auspicious goal that any entrepreneur considers at some time during their professional career, however, it can be a really demanding and costly process. It is for these reasons that some business people go with joint ventures when attempting to break into brand-new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can significantly increase the chances of success as partners pool their resources and connections in an attempt to increase efficiency. For instance, a business wishing to expand its distribution to brand-new markets and territories can take advantage of partnering with local businesses. This way, it can gain from an already existing local distribution network, not to mention having access to knowledge and expertise on the target market. Beyond this, regulations in specific jurisdictions limit access to foreign companies, suggesting that a JV arrangement with a regional entity would be the only way to gain admittance.

There's a long list of joint ventures that covers various sectors and companies across the globe, a few of which have culminated in the development of the world's most successful companies. That said, there are different types of joint ventures and picking the right one considerably depends on the objectives of the entities included and here the nature of their respective organisations. For example, project-based joint ventures are a type of partnership that unites 2 entities from various 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 government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular vehicle for growth as these unite 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.

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