Companies May Have Several Reasons for Creating Joint Ventures

question 225

Multiple Choice

Companies may have several reasons for creating joint ventures. Which of the following statements is one reason why firms may decide to form a joint venture?

• A) They may wish to contract manufacture with each other.
• B) They will save time to market if they pool their technological know-how.
• C) These arrangements are always less risky than strategic alliances.
• D) These arrangements avoid the temptation to tap into marketing and management expertise of the parent companies.

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Definitions:

Statement of Cash Flows

A financial report that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations, investment activities, and financial activities over a period.

Financing Activity

Transactions involving the flow of cash between a company and its owners and creditors, including issuing stocks, paying dividends, and borrowing or repaying loans.

Transactions

The financial events that affect the assets, liabilities, and equity of an entity, involving transfers or exchanges between two parties.