Question

Medzone Inc., a pharmacy company, has collaborated with Bit Corp., a food manufacturing company, to come up with a third company, MedBit Inc. This new company manufactures nutritious food and snacks with added vitamins and minerals. In this context, MedBit Inc. is a _____.

Answer 1

Answer:

MedBit Inc. is a joint venture company.

Explanation:

A joint venture is an entity established by two or more existing entities for a purpose.

Medzone Inc. and Bit Corp will jointly share from the business outcomes of this third entity, which is legally separate from the two.

Reasons for forming joint venture companies include to combine expertise, reduce costs, and leverage resources.  Medzone Inc. and Bit Corp must have considered these advantages in setting up MedBit Inc.

The purpose of all ventures is the creation of value for stakeholders.  Where two or more entities consider that they can achieve more value creation, they can come together to do so.