Question

When two or more firms come together to create a new business entity that is legally separate and distinct from its parents is known as

Options

• Contract manufacturing

• Franchising

• Joint venture

• Licensing

Answer 1

The model in which two or more firms pool their resources to form a new business entity that is legally separate and distinct from its parent companies is known as a joint venture. On the other hand, contract manufacturing is an outsourcing process, and the licensing and franchising models are those in which intellectual property rights are granted to foreign firms for a fee.

Hence, the correct answer is option Joint venture.