What Is the Primary Distinction Between a Joint Venture and a Strategic

question 36

Multiple Choice

What is the primary distinction between a joint venture and a strategic alliance in international marketing?

• A)Strategic alliances are only formed between companies from well-developed countries whereas joint ventures are between companies from economically-diverse countries.
• B)A joint venture involves only two companies whereas a strategic alliance is formed between three or more companies.
• C)A strategic alliance is formed by companies who have traditionally been rivals,which is not the case with a joint venture.
• D)A joint venture is formed between companies with dissimilar product offerings while a strategic alliance is formed between companies with similar product offerings.
• E)A joint venture is simply a financial investment in a foreign firm while a strategic alliance involves more than just financial support.

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Definitions:

Exchange Gain

A profit resulting from holding or transacting in foreign currencies as exchange rates vary.

Spot Rate

The existing selling or buying price of a certain currency for transactions that are completed right away.

Fair-Value Hedge

A hedge that is used to mitigate the risk of changes in the fair value of an asset, liability, or an unrecognized firm commitment.

Cost of the Hedge

The expenditure associated with implementing and maintaining a hedge against financial risk.