How a joint venture agreement can foster company growth

Just like any other business endeavour, joint ventures have advantages and disadvantages. This post will list the most noteworthy ones.

Business expansion is an ambitious goal that any entrepreneur thinks about at some point throughout their career, nevertheless, it can be a really stressful and expensive procedure. It is for these factors that some businessmen choose joint ventures when attempting to get into new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can greatly increase the opportunities of success as partners pool their resources and connections in an drive to maximise effectiveness. For example, a company wishing to expand its distribution to new markets and territories can take advantage of partnering with regional players. By doing this, it can benefit from an already existing local distribution network, not to mention having access to understanding and proficiency on the target market. Beyond this, guidelines in particular jurisdictions restrict access to foreign companies, meaning that a JV contract with a regional entity would be the only way to gain access.

For years, joint ventures in international business have culminated in equally helpful results, 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 gain access to knowledge that one business might be missing out on. For instance, one business may have exceptional marketing and distribution channels but does not have a streamlined production hub. By partnering with a company that has a well-established production process, both entities benefit greatly. Another reason why JVs are popular is the truth that companies share expenses and risks when starting a joint venture. This makes the partnership more attractive as both entities would share the cost of labour and advertising, and they both benefit from lower production costs per unit by leveraging their abilities and integrating expertise.

There's a long list of joint website ventures that covers various sectors and businesses across the globe, some of which have actually culminated in the development of the world's most successful businesses. That said, there are different types of joint ventures and picking the best one significantly depends on the goals of the entities included and the nature of their respective organisations. For example, project-based joint ventures are a kind of collaboration that unites two entities from different backgrounds to reach a common objective. This could be a JV between an industrial entity and an academic institution or short-term collaboration between a business person and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are also another popular means for growth as these unite two entities that co-exist in the exact same supply chain like buyers and suppliers, and they provide increased development chances for both parties involved.