Devonaile Inc. is a small-scale apparel manufacturer in Florida. Devonaile and other similar firms from Florida collaborate and form a separate company in India as none of the participants in this collaboration have active operations in the Indian market. The newly created firm primarily manufactures apparel suited to the tastes and preferences of the Indian customers. Identify the type of foreign market-entry approach depicted in this scenario.

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Quizplus · Accepted Answer

In this case, Devonaile Inc. and the other firms from Florida have formed a consortium. Consortia are similar to joint ventures and could be classified as such except for two unique characteristics: (1) They typically involve a large number of participants and (2) they frequently operate in a country or market in which none of the participants is currently active. Consortia are developed to pool financial and managerial resources and to lessen risks.