ABusiness can attain unforeseen gains through joint ventures with a partner which can prove to be extremely beneficial for both parties. The major benefits achieved by joint ventures are as follows:
Increased resources and capacity: Joining hands with another or teaming up adds to existing resources and capacity enabling the joint venture company to grow and expand more quickly and efficiently. The new business pools in financial and human resources and is able to face market challenges and take advantage of new opportunities.
Access to new markets and distribution networks: When a business firm joins hands on joint venture with a partner from another country, it unveils a vast growing market. For instance, foreign companies gain access to the vast Indian market when they form joint venture companies in India. The products that have reached a saturation point in their host country can be easily sold in new markets and they can also make use of the established distribution channels in different local markets, or, establishing their own retail outlets may prove to be very expensive.
Access to technology: Technology is considered as a major factor for most business enterprises to enter into joint ventures. Advancement in production techniques lead to superior quality products thereby saving a lot of time, energy and investment as they do not have to develop their own technology. In addition, technology also adds to efficiency and effectiveness leading to reduction in costs.
Innovation: There is a remarkable increase in the markets and becoming more demanding in terms of new and innovative products. Joint ventures enhance business to come up with new and creative products catering to the demands of the same market. Especially, foreign partners may come up with innovative products because of new ideas and technology.
Low cost of production: With the investment by international corporations India, they benefit immensely because of the lower cost of production. They are also able to obtain quality products for their global needs. India is becoming an important global source and tremendously competitive in many products. There are umpteen number of reasons for this viz., low cost of raw materials and labor, technically qualified labor force; management professionals, remarkably excellent manpower in different cadres viz., lawyers, chartered accountants, engineers, scientists. The international partner gets the products of required quality and specifications at a comparatively lower cost than what is prevailing in the home country.
Established brand name: When two business firms enter into a joint venture, one of the parties gain benefit from the other's benevolence which has already been customary in the market. If the joint venture is in India and with an Indian company, the Indian company need not spend time or money in developing a brand name for the product or a distribution scheme. There is a ready market awaiting the product to be launched. A lot of investment is saved in the process.
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