Just like any other commercial endeavour, joint ventures have advantages and disadvantages. This post will note the most noteworthy ones.
For years, joint ventures in international business have culminated in mutually beneficial outcomes, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are numerous reasons why companies go into joint ventures however perhaps the most important of which is to leverage resources and gain access to competence that one company may be missing out on. For example, one company may have excellent marketing and distribution channels however does not have a streamlined production hub. By partnering with a business that has a well-established manufacturing process, both entities benefit considerably. Another reason JVs are popular is the fact that companies share expenses and risks when starting a joint venture. This makes the partnership more attractive as both parties would share the cost of labour and marketing, and they both take advantage of lower production expenses per unit by leveraging their capabilities and combining expertise.
There's a long list of joint ventures that website covers different sectors and companies across the globe, a few of which have actually culminated in the creation of the world's most prosperous companies. That stated, there are different types of joint ventures and picking the ideal one greatly depends upon the goals of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a type of collaboration that brings together two entities from various backgrounds to reach a common goal. This could be a JV in between a commercial entity and an academic institution or short-term collaboration between an entrepreneur and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular means for growth as these unite two entities that co-exist in the same supply chain like buyers and wholesellers, and they offer increased growth chances for both parties.
Business growth is an ambitious goal that any business owner thinks about at some time throughout their professional career, however, it can be an extremely stressful and costly process. It is for these factors that some business people choose joint ventures when trying to break 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 instance, a company wanting to expand its distribution to brand-new markets and areas can gain from partnering with regional businesses. In this manner, it can gain from a currently existing regional distribution network, not to mention having access to understanding and expertise on the target market. Beyond this, policies 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.