Question at position 1 What type of agreement is defined as the transfer of the control of operations and management from one firm to another with the former becoming a unit of the latter?Joint ventureMergerAcquisitionContractual alliance

Question

Question at position 1 What type of agreement is defined as the transfer of the control of operations and management from one firm to another with the former becoming a unit of the latter?Joint ventureMergerAcquisitionContractual alliance

BlackTom AI · Accepted Answer

Restating the scenario helps frame the options: the question asks which type of agreement involves transferring the control of operations and management from one firm to another, with the former becoming a unit of the latter.
Option 1: Joint venture. A joint venture typically involves two or more firms forming a new, separate entity to pursue a business objective, sharing control and profits, but it does not usually entail one firm becoming a subsidiary or a unit of the other. This makes it inconsistent with the described transfer of control.
Option 2: Merger. A merger occurs when two firms combine to form a new company or one absorbs the other, resulting in a change in ownership and structure. However, the phrasing “the former becoming a unit of the latter” emphasizes a parent-subsidiary relationship rather than a full consolidation into a new entity, so this option is not an exact fit for the described transfer of control.
Option 3: Acquisition. An acquisition specifically involves one firm taking control over another, with the acquired firm becoming a subsidiary or part of the acquiring firm. This directly matches the idea of transferring control and the former becoming a unit of the latter, aligning with the given definition.
Option 4: Contractual alliance. A contractual alliance is a collaboration based on agreements without transferring control or management of operations, and typically keeps each party as an independent entity. This contradicts the concept of the former firm becoming a unit of the latter, making this option incorrect.
Overall, the reasoning above shows that the option describing transfer of control and subordinate integration best fits the provided definition, while the other options describe relationship structures that do not entail that specific transfer of control.

Question at position 1 What type of agreement is defined as the transfer of the control of operations and management from one firm to another with the former becoming a unit of the latter?Joint ventureMergerAcquisitionContractual alliance

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