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CRL, a European plastics manufacturer, is considering forming an alliance with a U.S. military goods manufacturer to develop a new type of polymer that can be used for international industrial and military applications. Such a partnership represents what type of direct investment?

a. Franchising
b. Joint Venture
c. Wholly owned affiliate
d. Greenfield venture
e. Outsourcing

User Kuma
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1 Answer

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Final answer:

The formation of an alliance between a European and a U.S. military goods manufacturer for polymer development is a Joint Venture, which involves pooling resources to accomplish a specific task. Correct answer is b. Joint Venture.

Step-by-step explanation:

When CRL, a European plastics manufacturer, considers forming an alliance with a U.S. military goods manufacturer to develop a new type of polymer, this represents a type of direct investment known as a Joint Venture. A Joint Venture is a business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task. In this case, the task is to develop a new polymer for industrial and military applications.

This is not a Greenfield venture as it does not involve starting a new business from scratch in a foreign market, but rather partnering with an existing firm. Nor is it franchising, as that involves the licensing of a business model and brand for a fee; wholly owned affiliate, as that would mean the European manufacturer completely owns a subsidiary; or outsourcing, since it's a collaborative partnership rather than contracting work out to another firm.

User Peter Dietz
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