Management Information System (MIS) Practice Exam

Which strategy is focused on entering international markets by forming partnerships?

1. Franchising

2. Joint ventures

3. Offshoring

4. Outsourcing

The correct answer is: Joint ventures

The strategy focused on entering international markets by forming partnerships is best defined by joint ventures. A joint venture involves two or more parties coming together to create a new business entity, sharing resources, risks, and profits. This approach is particularly effective in international markets where local knowledge, networks, and resources are crucial for navigating regulatory environments and market dynamics. By collaborating with established local firms, companies can quickly gain insights and access to markets that would be challenging to enter independently. Franchising, while also a method for international expansion, is primarily about a business allowing another party to operate under its brand and business model, rather than forming a partnership that shares ownership. Offshoring refers to relocating business processes to different countries, often for cost advantages, while outsourcing involves transferring specific business tasks or services to external providers. Neither offshoring nor outsourcing inherently involves forming a partnership in the context of entering a new international market, which distinguishes joint ventures as the primary strategy for that purpose.