Question

Problems with which entry approach can arise when the partners disagree or if the government places restrictions on the firm’s ability to move its profits out of the foreign country and back to its home country?

Answer 1

Answer: Joint venture

Explanation: A joint venture is a partnership or business arrangement in which two or more parties come together to pool their resources for the purpose of achieving a specific goal. This goal can be a new project, a new company or any other business activity. In a joint venture, all the parties are responsible for the costs, liability and profits or losses, although this does not affect each participants other businesses.

Joint ventures are particularly useful when entering a foreign market. All that is needed is to partner with a local business to ease the stress of doing business. A big problem arises when the partners disagree or the foreign government places restrictions on ability to move funds, which is a major risk in joint ventures.