Scenario: Sports Stuff, Inc.
Herb Graham is vice president of Sports Stuff, a business that develops, manufactures, and markets sports memorabilia. The company is looking to expand its operations into the European market. Herb believes that if the company expands its product line to include products reflecting sports that are popular in Europe, the company will achieve success there.
-Herb's boss is concerned with the firm's lack of experience in foreign markets. Herb might want to recommend that the firm create a ________ with a local partner as a means of minimizing this problem.
A) joint venture
B) turnkey project
C) wholly owned subsidiary
D) franchise

Question

Quizplus · Accepted Answer

A joint venture involves two or more firms forming a new entity to undertake a specific business activity. In this case, Sports Stuff, Inc. could partner with a local firm in Europe to establish a joint venture. This would allow them to benefit from the knowledge and experience of a local partner while also sharing the risks and rewards of the new venture. This would be an effective means of minimizing the firm's lack of experience in foreign markets. The other options (turnkey project, wholly owned subsidiary, and franchise) do not necessarily provide the same level of collaboration and shared risk that a joint venture would offer.