Question

NorthStar Inc. and The Royal Group have together established The Royal Star Group of hotels. NorthStar owns 49 percent and The Royal Group has a 51 percent share in The Royal Star Group of hotels. However, the management of The Royal Star Group of hotels is separate from its parent companies. What alliance type does this scenario best illustrate?

A. Sole Proprietorship
B. Non-equity alliance
C. Equity alliance
D. Joint venture

Answer 1

The scenario described illustrates a Joint Venture between NorthStar Inc. and The Royal Group, forming The Royal Star Group of hotels.

Step-by-step explanation:

The scenario described in the question best illustrates a Joint Venture.

In a joint venture, two or more companies come together to form a new entity or project, sharing the risks, responsibilities, and rewards.

In this case, NorthStar Inc. and The Royal Group have formed The Royal Star Group of hotels, with NorthStar owning 49% and The Royal Group owning 51%.

The fact that the management of The Royal Star Group of hotels is separate from its parent companies further confirms that it is a joint venture, as the new entity operates independently.