HealthTech wanted its research partner, an R&D company, to develop a cancer vaccine. However, the project required huge capital investments, and its research partner was not ready to solely face the risks involved. Thus, to gain its partner's confidence and to prove its involvement, HealthTech invested $100 million in the project. This investment made by HealthTech will result in a
A) cartel.
B) credible commitment.
C) corrective action.
D) parent-subsidiary relationship.

Question

Quizplus · Accepted Answer

The strategic decision made by HealthTech would be referred to as a credible commitment. A credible commitment is a long-term strategic decision that is both difficult and costly to reverse.

HealthTech Wanted Its Research Partner, an R&D Company, to Develop