Over the last two years, an American clothing manufacturer has partnered with a manufacturer in China to make clothes at a cheaper cost. How is this beneficial to both countries?
A) It is an example of a franchise in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company's brand name and a package of materials and services.
B) It is a greenfield venture in which owning the organization has been built from scratch.
C) It is a strategic alliance in which two countries share the risks and rewards of starting a new enterprise together in a foreign country.
D) It is an example of countertrading in which the country is bartering for goods.
E) It is a wholly owned subsidiary in which a foreign subsidiary is totally owned and controlled by an organization.
Answer: C) It is a strategic alliance in which two countries share the risks and rewards of starting a new enterprise together in a foreign country.