Which entry strategy involves two or more parent companies sharing ownership?

Which entry strategy involves two or more parent companies sharing ownership?

• A. Wholly Owned Subsidiary
• B. Joint Venture
• C. Franchising
• D. License Agreement

Answer: (B)

The entry strategy that involves two or more parent companies sharing ownership is a joint venture. In this arrangement, each parent company contributes resources, expertise, and capital to create a new, distinct entity, while also sharing in the risks and rewards associated with its operations. This collaborative approach allows companies to leverage each other’s strengths, such as market knowledge, technology, or distribution networks, thereby enhancing their competitiveness in international markets. Joint ventures are particularly useful when entering foreign markets, as they can help navigate local regulations, cultural differences, and market dynamics. The shared ownership structure also fosters a sense of partnership and alignment of interests, which can be critical for success in new and complex environments. This strategy is distinctly different from wholly owned subsidiaries, where one company retains full ownership and control, as well as from franchising and licensing agreements, which do not involve shared ownership of a new entity.

The entry strategy that involves two or more parent companies sharing ownership is a joint venture. In this arrangement, each parent company contributes resources, expertise, and capital to create a new, distinct entity, while also sharing in the risks and rewards associated with its operations. This collaborative approach allows companies to leverage each other’s strengths, such as market knowledge, technology, or distribution networks, thereby enhancing their competitiveness in international markets.

Joint ventures are particularly useful when entering foreign markets, as they can help navigate local regulations, cultural differences, and market dynamics. The shared ownership structure also fosters a sense of partnership and alignment of interests, which can be critical for success in new and complex environments. This strategy is distinctly different from wholly owned subsidiaries, where one company retains full ownership and control, as well as from franchising and licensing agreements, which do not involve shared ownership of a new entity.