Scenario: Sports Stuff Inc.
Herb Graham is vice president of Sports Stuff Inc., a business that develops, manufactures, and markets sports products. 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.
-The CEO of Sports Stuff has decided that the company needs to retain complete control over its operations in Europe.To achieve this objective,Herb would most likely recommend that the firm establish a ________.
A) joint venture
B) cross licensing agreement
C) wholly owned subsidiary
D) strategic alliance

Question

Quizplus · Accepted Answer

To retain complete control over its operations in Europe, Sports Stuff Inc. would need to establish a subsidiary in Europe that it fully owns and controls. This would allow the company to make all decisions regarding operations, product development, and marketing without having to share control with any other entity. Joint ventures, cross licensing agreements, and strategic alliances all involve sharing control or resources with other companies, which would not allow Sports Stuff Inc. to have complete control over its operations in Europe. Therefore, the best choice for the company would be to establish a wholly owned subsidiary.