To minimize its own risks, the Boomtown Petroleum Corp. of Houston, Texas, operates a South American oil refinery that is owned by residents of that country. Boomtown is engaged in an activity known as:
A) management contracting.
B) a joint venture.
C) exporting.
D) licensing.
E) direct investment.

Question

Quizplus · Accepted Answer

Management contracting involves a company (Boomtown Petroleum Corp.) managing operations for a facility (the South American oil refinery) that is owned by another party (residents of that country), without owning the facility itself. This arrangement allows the managing company to apply its expertise and brand while minimizing its investment risk.

To Minimize Its Own Risks, the Boomtown Petroleum Corp