Which of the following offers the highest level of control and presents the highest level of risk?Group of answer choicesJoint ventureConsortiumWholly-owned subsidiaryFranchise
Question
Which of the following offers the highest level of control and presents the highest level of risk?Group of answer choicesJoint ventureConsortiumWholly-owned subsidiaryFranchise
Solution
The option that offers the highest level of control and presents the highest level of risk is the Wholly-owned subsidiary.
Here's why:
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Joint Venture: This is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. The control is shared and so is the risk.
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Consortium: This is a group made up of two or more individuals, companies or governments that work together to achieving a common objective. Control and risk are distributed among the members.
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Wholly-owned subsidiary: This is a company whose common stock is 100% owned by another company, the parent company. Since the parent company has full control, it also bears all the risk. Therefore, this option offers the highest level of control and presents the highest level of risk.
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Franchise: This is a type of license that a party (franchisee) acquires to allow them to have access to a business's (the franchisor) proprietary knowledge, processes and trademarks in
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