The importance of joint venture companies in commerce

There are different joint venture techniques, each fit for a specific function. Here is all you have to know.

There's a long list of joint ventures that spans different sectors and businesses around the world, some of which have culminated in the development of the world's most successful companies. That said, there are various types of joint ventures and picking the right one considerably depends upon the objectives of the entities involved and the nature of their respective organisations. For instance, project-based joint ventures are a type of collaboration that combines two entities from different backgrounds to reach a shared goal. This could be a JV in between a business entity and a university or short-term collaboration in between a business owner and a federal 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 2 entities that co-exist in the same supply chain like buyers and vendors, and they offer increased development opportunities for both parties.

Business growth is an ambitious objective that any business owner thinks about at some point throughout their career, nevertheless, it can be a really stressful and costly process. It is for these factors that some businessmen opt for joint ventures when attempting to get 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 attempt to maximise performance. For example, a company wanting to broaden its distribution to new markets and areas can take advantage of partnering with local players. By doing this, it can gain from an already existing regional distribution network, not to mention having access to knowledge and expertise on the target market. Beyond this, guidelines in certain jurisdictions restrict access to foreign businesses, meaning that a JV arrangement with a local entity would be the only way to gain admittance.

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 businesses go into joint ventures but possibly the most important of which is to take advantage of resources and access knowledge that one company might be missing out on. For instance, one company may have excellent marketing and circulation channels however does not have here a structured production center. By partnering with a business that has a well-established production process, both entities benefit greatly. Another reason why JVs are popular is the truth that businesses share costs and risks when embarking on a joint venture. This makes the collaboration more attractive as both parties would share the cost of labour and marketing, and they both gain from lower production costs per unit by leveraging their abilities and combining knowledge.