A Joint Venture Is an Attractive Way for a Company

question 69

Multiple Choice

A joint venture is an attractive way for a company to enter a new industry when:

• A) a firm is missing some essential skills,capabilities,or resources and needs a partner to supply the missing expertise and competencies or fill the resource gaps.
• B) it needs access to economies of scope and good financial fits in order to be cost-competitive.
• C) it is uneconomical for the firm to achieve economies of scope on its own initiative.
• D) the firm has no prior experience with diversification.
• E) it has not built up a hoard of cash with which to finance a diversification effort.

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Definitions:

Single-Firm

Refers to a market situation dominated by a single producer or service provider.

Network Externalities

Effects on a user of a product or service that depend on the number of other users of the same or compatible products or services.

Smartphone Market

The sector of the economy that deals with the production, sale, and distribution of smartphones and related services.

Societal Loss

The total loss in welfare or efficiency that a society faces, often due to inefficiencies or externalities in markets.