Q.What is a Joint Venture? How does it differ from a Wholly Owned Subsidiary as a mode of MNC entry?

A Joint Venture and a Wholly Owned Subsidiary are both ways an MNC can set up in a host country, but they differ in exactly who owns and controls the resulting company. …

A Joint Venture is a company set up jointly by the MNC and a local (host-country) company, with both parties contributing capital and sharing ownership, management responsibility and profits/losses in an agreed proportion. It lets the MNC draw on the local partner's market knowledge, existing distribution network and familiarity with local regulations, while sharing both risk and control with that partner.

A Wholly Owned Subsidiary, in contrast, is a company set up entirely by the MNC, which holds all (or almost all) of its share capital. This gives the MNC complete ownership and control over the subsidiary's operations and strategy, but the MNC also bears the entire capital investment and risk alone, without a local partner to share it. …

Describing a Joint Venture and a Wholly Owned Subsidiary as though they were the same thing simply because both involve "setting up a company" in the host country, without ide …