Which growth strategy involves forming a separate enterprise with two firms retaining their identities?

Which growth strategy involves forming a separate enterprise with two firms retaining their identities?

• A. Merger
• B. Franchise
• C. Market Development
• D. Joint Venture

Answer: (D)

This growth strategy centers on creating a separate new company that is jointly owned by two firms, while each parent business remains legally distinct. In a joint venture, the partners contribute resources and share control, profits, and risks in the new enterprise, which operates independently from either parent. This differs from a merger, where the two firms combine into one entity and lose their separate identities; from franchising, which licenses a business model to another party; and from market development, which expands sales of existing products into new markets without forming a new company.

This growth strategy centers on creating a separate new company that is jointly owned by two firms, while each parent business remains legally distinct. In a joint venture, the partners contribute resources and share control, profits, and risks in the new enterprise, which operates independently from either parent. This differs from a merger, where the two firms combine into one entity and lose their separate identities; from franchising, which licenses a business model to another party; and from market development, which expands sales of existing products into new markets without forming a new company.