CRL, a European plastics manufacturer, is considering forming an alliance with a U.S. military goods manufacturer to develop a new type of polymer that can be used for international industrial and military applications. Such a partnership represents what type of direct investment?
A) Franchising
B) Joint Venture
C) Wholly owned affiliate
D) Greenfield venture
E) Outsourcing

Question

Quizplus · Accepted Answer

The scenario describes the formation of an alliance between CRL and a U.S. military goods manufacturer to develop a new type of polymer. This represents a joint venture, which is a direct investment where two or more companies form a new entity to share risks and rewards of a specific project or business venture. It is different from franchising, outsourcing, wholly-owned affiliate, and greenfield venture as it involves a partnership between two companies to form a new entity.

CRL, a European Plastics Manufacturer, Is Considering Forming an Alliance