Tag: joint ventures

Questions Related to joint ventures

As equity joint venture is _________.

joint ventures private, public and global enterprises public sector, private sector and global enterprises organisation of commerce and management business studies

  1. A technological sharing arrangement between private company and Government company

  2. A capital sharing arrangement between an MNC and a local company (or even a foreign Government) or another MNC.

  3. A capital sharing arrangement between the private company and government company

  4. None of these

Show answer
Correct Option: B
Explanation:

A joint venture is created by two or more parties generally characterized by a share of ownership, return, risk and share profits as equity it is an agreement between two companies to become one venture, for example, Starbucks is a joint venture of TATA enterprise.

Everything is an advantage of joint ventures except ________.

joint ventures private, public and global enterprises public sector, private sector and global enterprises organisation of commerce and management business studies

  1. the costs of a new project can be split between the companies involved

  2. manufacturing costs will be divided between the firms in the venture

  3. joint ventures between firms in different countries can create new market opportunities

  4. management of the joint venture will lead to disagreements.

Show answer
Correct Option: D
Explanation:
Although joint ventures avail the benefit of reduction in cost, easy entry in overseas market etc., management of joint ventures lead to disagreement due to conflict in the thoughts of the parties involved. Small disagreement may prove healthy for the business as it will force management to evaluate its decision more carefully but if all parties are regularly not satisfied joint venture may lead to failure.

How many ways are there to establish a joint venture?

joint ventures private, public and global enterprises public sector, private sector and global enterprises organisation of commerce and management business studies

  1. 7

  2. 4

  3. 9

  4. 3

Show answer
Correct Option: D
Explanation:

There are three ways to establish a joint venture. The equity joint venture, the contractual joint venture, licensing agreement.

A foreign and a local investor can form a joint firm.

joint ventures private, public and global enterprises public sector, private sector and global enterprises organisation of commerce and management business studies

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

A foreign investor and a local investor can form a joint firm, such type of a joint firm are known as international joint venture. Such kind of a joint venture are the easiest way to enter an international market.

A foreign investor cannot invest in a local company to from a joint venture.

joint ventures private, public and global enterprises public sector, private sector and global enterprises organisation of commerce and management business studies

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

A foreign investor and a local investor can form a joint firm, such type of a joint firm are known as international joint venture. Such kind of a joint venture are the easiest way to enter an international market.

Any two companies joining hands for mutual benefits is known as an _____________. 

joint ventures private, public and global enterprises public sector, private sector and global enterprises organisation of commerce and management business studies

  1. association

  2. joint venture

  3. merger

  4. alliance

Show answer
Correct Option: B
Explanation:

A joint Venture is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Examples of joint ventures include: Vodafone & Telefónica agreed to share their mobile network. BMW and Toyota co-operate on research into hydrogen fuel cells, vehicle electrification and ultra- lightweight materials. West Coast  joint venture between Virgin Rail & Stagecoach.

A joint venture must be based on a memorandum of understanding signed by both the parties highlighting the basis of a joint venture agreement.

joint ventures private, public and global enterprises public sector, private sector and global enterprises organisation of commerce and management business studies

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

A joint venture must be based on a memorandum of understanding signed by both the parties highlighting the basis of a joint venture agreement. The terms should be thoroughly discussed and negotiated to avoid any legal complications at a later stage.

Joint ventures can be for long term relationship or short term projects.

joint ventures private, public and global enterprises public sector, private sector and global enterprises organisation of commerce and management business studies

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

The reason for a joint venture is usually some specific project. Joint ventures can be informal (a handshake) or formal, and they can be short term or long term. Often the joint venture creates a separate business entity, to which the owners contribute assets, have equity, and agree on how this entity may be managed.

The low cost of production for an international company is due to _________.

joint ventures private, public and global enterprises public sector, private sector and global enterprises organisation of commerce and management business studies

  1. low cost of labour

  2. low cost of raw material

  3. technically qualified workforce

  4. all of the above

Show answer
Correct Option: D
Explanation:

The low cost of production for an international company is due to low cost of material and labour and technically qualified workforce. The international partner thus gets the products of required quality and specifications at a much lower cost than what is prevailing in the home country. 

The main reasons for a starting a joint venture are _____________.

joint ventures private, public and global enterprises public sector, private sector and global enterprises organisation of commerce and management business studies

  1. expansion of business

  2. development of new products

  3. moving into new markets

  4. all of the above

Show answer
Correct Option: D
Explanation:

A joint venture is an arrangement in which two or more companies or parties join forces to engage in a specific business activity. The most common reasons for businesses to decide to enter into a joint venture include gaining access to new markets, increasing market power, and sharing resources.