Question

Rocket Corporation and Star Inc. wish to combine their capabilities to launch a single flight to the moon. The appropriate legal entity for this project is most likely a. a syndicate. b. a joint stock company. c. a joint venture. d. a business trust.

Answer 1

Answer:

C) a joint venture

Explanation:

A joint venture is a business organzation in which two or more firms come together to form an alliance. In a joint venture, resources of different firms are combined together to pursue specific projects and gain strategic edge in the market.

Joint venture involves the creation of a new firm from the coming together of two or more firms.

Advantages of joint venture

1. More capital can be raised to start the business by the participants.

2. Profits is shared among participants alone.

3. There is an improvement in the level of expertise because of the varying knowledge of participants.

4. Ability to compete well in the market.

5. The joint venture enjoys economies of scale

Disadvantages of joint venture

1. Decision making might be slow because the ideas of different participants will be put into consideration.

2. Loss is shared among participants alone.

3. Difference in the business objectives by different members might hinder the growth of the company.