Which statement describes a joint venture?

• A. A new company is formed with a local partner to share resources
• B. A company licenses its product to a foreign firm
• C. A firm exports products from its home country
• D. A firm wholly owns a foreign operation

Answer: (A)

A joint venture is a partnership where two or more companies create a new legal entity to pursue a shared business goal in a foreign market, pooling resources and sharing risks and profits. The statement about forming a new company with a local partner to share resources fits this idea exactly, since it describes creating an entity jointly with another party to operate together. This differs from licensing, where one firm simply allows another to use its product without forming a new entity; exporting, which is selling from the home country without local production or ownership; and a wholly owned foreign operation, where a single company runs a foreign unit without a local partner.