Terranova Autos Inc

Multiple Choice

Terranova Autos Inc.,a large automobile company,made an initial small investment in a start-up company that was developing a solar-powered car.This gave Terranova Autos controlling interests in the start-up company.However,Terranova Autos had no obligations to make continued investments in the experiments of the start-up company.It could invest in small amounts depending on the new product's success at each stage of its development.If the product proved to be successful,Terranova Autos would have the right to buy out the start-up company.This approach to strategic alliance is referred to as

A) a break-even analysis.
B) a real-options perspective.
C) credible commitment.
D) transaction cost economics.