What is a joint venture?

The correct answer is option 2- It means establishing a firm that is jointly owned by two or more otherwise independent firms.

Joint venture is a very common strategy for entering into foreign markets. A joint venture means establishing a firm that is jointly owned by two or more otherwise independent firms. In the widest sense of the term, it can also be described as any form of association which implies collaboration for more than a transitory period. A joint ownership venture may be brought about in three major ways:

• (i) Foreign investor buying an interest in a local company
• (ii) Local firm acquiring an interest in an existing foreign firm
• (iii) Both the foreign and local entrepreneurs jointly forming a new enterprise.