One advantage of joint ventures is that

Question

BlackTom AI · Accepted Answer

When evaluating the statement, we should consider what a joint venture typically offers to the foreign firm. 
Option 1: 'the foreign firm benefits from a local partner's knowledge of the host country' This is a classic advantage of JVs: the local partner provides crucial insights into local market conditions, regulatory environment, distribution channels, and cultural nuances that the foreign firm would otherwise struggle to access. This knowledge reduces entry risk and accelerates adaptation. 
Option 2: 'it gives a firm tight control over subsidiaries, which enables it to realize experience curve or location economies' In a joint venture, control is typically shared with the local partner; the foreign firm often does not gain tight, unilateral control, which can limit its ability to fully realize control-based efficiencies like the experience curve or location economies. 
Option 3: 'the foreign firm can protect its technology from being appropriated by its local partner' Actually, technology protection is a concern in JVs. The sharing of proprietary knowledge can risk leakage or misuse, and unless strong contracts and governance are in place, this is not an intrinsic advantage. 
Option 4: 'there is a low likelihood of friction and conflict between the foreign and local partners' On the contrary, JVs can experience significant friction due to cultural differences, management style clashes, and competing objectives, so this statement is generally inaccurate. 
Overall, option 1 correctly identifies a fundamental advantage of joint ventures, while the other options describe common drawbacks or misconceptions about JVs.

INTB2205.34987.202530 Pre-Class Quiz: Session 3

One advantage of joint ventures is that

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