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Internal Motivations
A cost cutting strategy may be reason enough to venture into networking whereby the production
process avoids wasteful duplication of resources, utilizes by-products and processes, and may
even allow the partners to share brands and distribution channels. Another internal motivation
is the need to share new intelligence and production methods. These relationships can help
a firm emulate innovative managerial practices, superior management systems and improved
communication patterns.
External Motivations
This motivation drives the formal network to come up with improved current strategic positions
with respect to the industry in which they belong. For instance a set of firms is more likely to be
able to influence the structure of the industry’s evolution than a single firm. A joint venture could
also act to preempt the possible entry of new competitors thereby giving the partnership a lead
that is less likely to be challenged in the industry. This will ensure customer loyalty as the venture
expands its capacity to serve. Another motivation here is the acquisition of resources at better
terms from suppliers. Economies of scale play a major role in getting better deals.
Strategic Motivations
Some forms of joint venture will exist not solely with the objective of deriving immediate benefits
but for creative reasons, to exploit synergies, to develop new technologies or extend old ones.
It could also be a room for a venture to set a toehold in a market that is not completely ready for
the product or service in the offing, a product or service that needs long term credibility.
Social Motivations
Here, firms network not for purely profit oriented reasons. The firms come together to promote
their own values and social agendas. A lead firm will set precedence by setting a forum where
other entrepreneurs who are committed to social changes through business come together.
The network is a loose collection of entrepreneurs, social activists, corporate executives and
philanthropists. The network brings individuals of common purpose together for the purpose of
achieving a common social goal.
Kavungya answered the question on April 10, 2021 at 10:19
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