Compare and contrast joint ventures and wholly owned subsidi

Compare and contrast joint ventures and wholly owned subsidiaries. What are the adbantages and disadvantages of each form of market entry? Why might a company choose one over the other?

Solution

Joint ventures and wholly owned subsidiaries have in common that they are controlled by other businesses but besides thtat fact, they are very different from each other.

A Joint venture is owned and operated by 2 or more companies, a wholly owned subsidiary is owned by a single company.

Wholly owned subsidiaries are usually riskier than a joint venture because in a joint venture the risk is divided between more than 1 company, if buisness fails the losses are divided but in wholy owned subsidiaries the firm controlling it absorbs all the damage.

The benefits are greater on wholly owned because the profits dont need to be shared.

If the business is considered a low risk then Wholly owned subsidiadires should be the type of business to choose but if there is high risk, need of specific skills and knowledge is best to go with a joint venture. It will all depend on the nature of the business