Leodan, a glass manufacturing firm based in the U.S., has sole control over several glass manufacturing facilities located all over the world. The company assumes the entire risk if any of the facilities undergoes losses, and it enjoys all the profits if the facilities do well. Which of the following methods has Leodan used to conduct business globally in this scenario?
A) The formation of a joint venture
B) The establishment of a strategic alliance
C) The formation of wholly owned affiliates
D) The establishment of a cooperative contract

Question

Quizplus · Accepted Answer

Leodan has used the method of forming wholly owned affiliates to conduct business globally. Wholly owned affiliates are subsidiaries in which a firm owns 100% of the stock, and as per the scenario, Leodan has sole control over multiple glass manufacturing facilities located all over the world. Hence, Leodan assumes the entire risk and enjoys all the profits, making it a wholly owned subsidiary.

Leodan, a Glass Manufacturing Firm Based in the U