Question

As a general rule, the Chinese government allows foreign companies to participate in its market only if those companies agree to establish operations with local Chinese enterprises. Which market entry mode would be the appropriate choice under these circumstances?
a. acquisition
b. licensing
c. joint venture
d. exporting
e. franchising

Answer 1

Answer:

C

Explanation:

Lets understand the terms given in simple language, first.

• Acquisition -- occurs when a company takes control of most or all of another company
• Licensing -- this is when a company gives permission to another company to manufacture its product, with payment terms
• Joint venture -- this is when 2 or more businesses jointly put their resources at work to accomplish more business or a specific task
• Exporting -- business selling their goods to other countries
• Franchising -- this is when a company gives rights to another to sell their products

In this problem, we see that Chinese companies wants a part of foreign companies when they want to do business in China. That means, both foreign and Chinese company do business together.

We can rule out acquisition, exporting, franchising immediately.

Licensing is rules out as well because they are doing it "TOGETHER", that can mean only "joint venture".

C is the correct choice.