The Acrylic Paint Company in Canada has joined forces with the 1-2-3 Plastics Company in Italy to create a non-peeling, plastics-based paint. Both companies intend to share the research costs and any profits. This an example of
A) a licensing arrangement.
B) a branch office setup.
C) a strategic alliance.
D) a foreign direct investment.
E) an import-export relationship.

Question

Quizplus · Accepted Answer

This is a strategic alliance because both companies are joining forces, sharing costs and profits, with the intention of creating a new product. This is not a licensing arrangement, branch office setup, foreign direct investment, or import-export relationship as there is no indication that one company is licensing their technology to the other, setting up a physical presence in another country, investing in a foreign company, or importing/exporting goods.

The Acrylic Paint Company in Canada Has Joined Forces with the 1-2-3