ACCA Strategic Business Leader (SBL) Practice Exam

What outcome does a successful joint venture usually aim for?

1. Creation of a new market trend

2. Enhancement of individual brand identity

3. Development of a separate legal entity

4. Increased operational autonomy

The correct answer is: Development of a separate legal entity

A successful joint venture primarily aims for the development of a separate legal entity, as this structure allows the collaborating parties to pool their resources and expertise while also mitigating risks associated with entering new markets or projects. By creating a distinct legal entity, the joint venture can operate independently from the parent companies, which enhances operational efficiency and clarity in decision-making. This separate legal entity can enter contracts, own assets, and carry liabilities that are distinct from those of the parent companies, which is crucial in protecting the interests of each parent organization involved. Furthermore, it allows for clearer accountability and governance structures, which are necessary when two or more companies collaborate. The focus on achieving synergy and sharing in the economic benefits generated by the joint venture underlines the importance of this legal distinction. The other options, while potentially relevant in different contexts, do not capture the primary outcome aimed for in a joint venture. Creating a new market trend, enhancing individual brand identity, and increasing operational autonomy may occur as a result of a joint venture, but they are not the fundamental goal that defines the structure and purpose of forming a separate legal entity.