What describes a cooperative venture where a company creates a local business with foreign investors?

A cooperative venture where a company creates a local business with foreign investors is best described as joint ownership. This arrangement involves two or more parties coming together to form a new entity, often sharing resources, risks, and profits. Joint ownership actively engages foreign investors in the management and operational aspects of the business, which can facilitate market entry and expand the local business’s capabilities by leveraging the knowledge and capital of its partners.

The collaboration inherent in joint ownership allows for a blending of local market knowledge and international business strategies, making it particularly advantageous for companies looking to navigate different regulatory environments or cultural nuances. This approach can also enhance innovation and competitive advantage by combining different expertise.

On the other hand, licensing involves granting permission to a foreign entity to produce and sell products under the brand of the owner, without creating a new entity. Contract manufacturing involves outsourcing production to a local firm but does not establish a co-owned venture. Management contracting focuses on the management aspect, where one firm provides management expertise to another, again without creating a joint business entity. Each of these options represents a different form of international business strategy but does not encapsulate the collaborative ownership aspect found in joint ownership.