In the context of a company entering a foreign market, identify a difference between licensing and wholly owned subsidiaries.
A) Licensing is an equity mode of entering a foreign market, whereas wholly owned subsidiaries refer to a nonequity mode of entering a foreign market.
B) Licensing possesses high risk, whereas wholly owned subsidiaries are subjected to low risk.
C) Licensing protects intellectual property, whereas wholly owned subsidiaries are prone to losing their intellectual property.
D) Licensing creates distance from customers, whereas wholly owned subsidiaries provide direct exposure to local customers.

Question

Quizplus · Accepted Answer

Licensing involves granting a foreign company the rights to produce and sell one's product, creating a level of separation from the local market and customers. In contrast, wholly owned subsidiaries involve a company fully owning a local entity, allowing direct operation and interaction within the foreign market, thus providing direct exposure to local customers.

In the Context of a Company Entering a Foreign Market