Question

Which of the following strategies is a firm most likely to use, if it initiates a joint venture with a local company in a foreign country, as a way of adapting to risk?

A. participative management
B. localization of the operation
C. equity sharing
D. development assistance

Answer 1

The strategy most likely to be used by a firm that initiates a joint venture with a local company in a foreign country as a way of adapting to risk is equity sharing.

Step-by-step explanation:

The strategy most likely to be used by a firm that initiates a joint venture with a local company in a foreign country as a way of adapting to risk is C. equity sharing.

Equity sharing involves the allocation of ownership between the two companies. By sharing equity, both parties have a stake in the success of the venture and are motivated to work together to mitigate risks and ensure the venture's success.

For example, if a U.S. company forms a joint venture with a local company in China, both companies may contribute capital and resources to the venture and share ownership in the new entity. This allows the U.S. company to adapt to risk by leveraging the local company's knowledge of the Chinese market and business environment.