Suppose a company wants to expand into a foreign market or combine its product with that of another firm. One of the quickest and most effective ways to accomplish this is through a strategic alliance or joint venture (JV) with another business. An alliance or JV enables a company to expand without developing a new wholly-owned subsidiary, business, or product.
The alliance or JV may be domestic or international. Parties may contribute technical know-how, a brand name (goodwill), or managerial capability. In the international context, a foreign partner may provide production facilities, a marketing network, or inexpensive access to natural resources. These may come in the form of a local subsidy (which could be revoked or repealed) or a local barrier to entry with regard to a regionally-priced basic material.