Question

Which one of the following modes of entry requires higher level of risks?

(a) Licensing

(b) Franchising

(c) Contract manufacturing

(d) Joint venture

Answer 1

It is the joint venture model that requires a very high level of risk. This is because, in a joint venture, two or more firms join together to share their technology and trade secrets. This in turn raises the possibility that the shared information or secrets might be revealed.

Hence, the correct answer is option (d).