When a company wants to be compensated in a foreign subsidiary beyond its contribution in capital and managerial resources, it often ________.
A)licenses intangible property to its subsidiary
B)negotiates a special agreement with the host government
C)establishes a management contract
D)sets up an equity alliance

Question

Quizplus · Accepted Answer

Licensing intangible property, such as patents or trademarks, allows the parent company to receive royalties or fees from the subsidiary for the use of its intellectual property, which can provide additional revenue beyond capital and managerial resources. This is a common way for companies to monetize their intangible assets and generate additional income from their foreign operations. Negotiating a special agreement with the host government or setting up an equity alliance are also possible options, but these are less common and may involve more complex negotiations and legal arrangements. Establishing a management contract is not a viable option for generating additional compensation beyond capital and managerial resources.

When a Company Wants to Be Compensated in a Foreign