Which of the following is not a reason mentioned in the text for why an IC may experience of loss of freedom and flexibility in joint ventures?
A) the IC's partners have control of the venture.
B) the IC's partners can bring legal pressures on the IC to limit its decision making.
C) the IC cannot buy out its partners' shares.
D) the IC's partners can bring legal pressures on the IC.

Question

Quizplus · Accepted Answer

Why might an IC experience a loss of freedom and flexibility in joint ventures and subsidiaries that are less than 100 percent owned? If shareholders outside the IC have control of the affiliate, they can block any IC headquarters' efforts, for example, to move production factors away or to fill an export order from another affiliate or subsidiary. Even if outside shareholders are a minority and cannot directly control the affiliate, they can bring legal or political pressures on the IC to prevent it from diminishing the affiliate's profitability for the IC's benefit. Likewise, the local partner in a joint venture is highly unlikely to agree with measures that penalize it for the IC's benefit. Factors such as these can substantially reduce the control an IC might be able to exercise over such subsidiaries and their activities.

Which of the Following Is Not a Reason Mentioned in the Text