A firm that establishes a direct investment in a foreign country through a co-ownership arrangement that pools resources, shares risks, and shares control of business operations is engaging in ___.
A) a licensing agreement
B) a franchise
C) a joint venture
D) an equity alliance
E) outsourcing

Question

Quizplus · Accepted Answer

A joint venture involves two or more firms forming a co-ownership arrangement to establish a direct investment in a foreign country, in which they pool resources, share risks, and control business operations. Licensing agreements involve granting permission to use intellectual property rights or know-how, while a franchise is a type of licensing agreement in which the franchisor provides a proven business model and support system to the franchisee. An equity alliance involves two or more firms forming a strategic partnership to invest in each other's equity or stocks. Outsourcing involves contracting out a specific business function or process to an external provider. Therefore, the best choice for this scenario is a joint venture.

A Firm That Establishes a Direct Investment in a Foreign