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:

Shareholders

Individuals or entities that own one or more shares of stock in a public or private corporation, granting them ownership interests and voting rights.

Repurchase Price

The price at which an open-end mutual fund or a security that is bought back by the issuer, often a part of the repurchase agreement's terms.

Earnings Per Share

A financial metric indicating the portion of a company's profit allocated to each outstanding share of common stock.

Market Price

The existing price for purchasing or selling an asset or service.