Question 1

When consumers buy counterfeit goods, payments accrue to the firm that invented the product and not to illicit enterprises.

Accepted Answer

When consumers buy counterfeit goods, payments accrue to illicit enterprises who profit from selling fake or pirated versions of products. The original inventing firm loses out on potential sales and profits.

Question 2

Under a build-operate-transfer (BOT) arrangement, a firm or consortium of firms contracts to build a major facility abroad and then transfers ownership to the project sponsor, typically the host-country government or public utility.

Accepted Answer

This is a correct definition of the build-operate-transfer (BOT) arrangement.

Question 3

Which of the following is an example of licensing?
A) An American electronics firm has given the right to a new process for manufacturing e-book readers to an electronics manufacturer in Canada.
B) An Indian automobile manufacturing company, buys engines from a Japanese manufacturer for its environment friendly cars.
C) A South-Korean consumer electronics manufacturer produces the screens for its brand of television and sends orders to a factory in China to manufacture the casing for the television.
D) A U.K-based motorcycle manufacturer, produces limited-edition customizations of the company's stock models and sells it to customers around the world.

Accepted Answer

Licensing refers to the process of giving the right to use a particular technology or product to another company for a fee or royalty. In this case, the American electronics firm is giving the right to a new process for manufacturing e-book readers to the Canadian electronics manufacturer, which is an example of licensing. Option B is an example of outsourcing, option C is an example of offshoring, and option D is an example of customization.

Question 4

Treaties that support international protection of intellectual property harm developing economies due to high capital investment.

Accepted Answer

The answer of Treaties that support international protection of intellectual...

Question 5

Where counterfeiting and piracy are commonplace, companies are reluctant to invent, innovate, and market legitimate products, which reduces consumer choices and ultimately lowers living standards.

Accepted Answer

Counterfeiting and piracy discourage companies from investing in research and development and marketing of legitimate products, which can result in fewer options for consumers and ultimately lower living standards.

Question 6

________ is a fee paid periodically to compensate a licensor for the temporary use of its intellectual property, often based on a percentage of gross sales generated from the use of the licensed asset.
A) Duty
B) Residual
C) Royalty
D) Tariff

Accepted Answer

A royalty is a fee paid periodically to compensate a licensor for the temporary use of its intellectual property, often based on a percentage of gross sales generated from the use of the licensed asset. A duty is a tax levied on goods imported into a country, a residual is the amount leftover after other amounts have been subtracted, and a tariff is a tax on imported or exported goods.

Question 7

Which of the following is characteristic of cross-border contractual relationships?
A) When compared to FDI, they are less susceptible to volatility and risk, and tend to bring both parties a predictable stream of revenue.
B) The focal firm attains maximum control by establishing a physical presence, and ownership of key assets, in the foreign market.
C) It attracts high attention and criticism for the focal firm because of the local perception of foreign entities.
D) They are governed by a contract that provides the focal firm with no control over the foreign partner.

Accepted Answer

Cross-border contractual relationships tend to provide a predictable stream of revenue and are less susceptible to volatility and risk when compared to FDI. This is because the focal firm does not have to invest heavily in establishing a physical presence or owning key assets in the foreign market. Instead, both parties agree to a contractual relationship that outlines their roles and responsibilities.

Question 8

Which of the following is an example of intellectual property?
A) systems of measurement
B) Volkswagen's logo
C) an unpublished book
D) a phone directory

Accepted Answer

The answer of Which of the following is an example...

Question 9

The purpose of intellectual property rights is to ________.
A) prevent excessive regulation and government bureaucracy
B) grant a firm permission to use another firm's proprietary names
C) allow inventors monopoly advantage for a specified period of time
D) allow a firm to use an entire business system in exchange for compensation

Accepted Answer

Intellectual property rights are designed to give inventors/creators exclusive rights to their invention/creation for a limited period of time. This allows them to recoup the financial and time investments made during the development of the invention/creation. This monopoly advantage (limited to a set period) can encourage innovation and creativity since the inventor's/creator's idea is guaranteed to be theirs alone for a period of time.

Question 10

In international leasing, a major advantage for the lessor is the ability to gain quick access to target markets, while putting assets to use earning profits.

Accepted Answer

This is a major advantage of international leasing as the lessor can quickly lease out assets to lessees in target markets, earning profits and increasing their market share in those regions.

Question 11

Turnkey contracting is an arrangement in which the focal firm or a consortium of firms plans, finances, organizes, manages, and implements all phases of a project abroad and then hands it over to a foreign customer after training local workers.

Accepted Answer

Turnkey contracting involves the focal firm or a consortium of firms taking complete responsibility for all phases of a project abroad and then handing it over to the foreign customer after training local workers.

Question 12

A collective mark ________.
A) is intended to improve the product's aesthetics and usability as well as increase its production efficiency, performance, or marketability
B) protects original works of authorship, giving the creator the exclusive right to reproduce the work, display and perform it publicly, and authorize others to perform these activities
C) is a distinctive design, symbol, logo, word, or series of words placed on a product label
D) is a logo belonging to an organization whose members use it to identify themselves and associate their products with a level of quality or accuracy, geographical origin, or other positive characteristic

Accepted Answer

A collective mark is a logo or symbol used by an organization or group of individuals to identify themselves and their products as meeting a certain standard of quality or having a specific origin. It is not related to improving aesthetics, protecting original works, or being placed on a product label.

Question 13

Which of the following is true about cross-border contractual relationship?
A) It is a more visible strategy than FDI and draws a lot of criticism from the local market.
B) They are more susceptible to volatility and risk compared to FDI.
C) A local firm allows the focal firm to blend into the local market, attracting less attention.
D) Focal firms use contractual relationships as an advanced entry strategy in foreign markets.

Accepted Answer

Cross-border contractual relationships, such as licensing and franchising, allow the focal firm to partner with a local firm and benefit from their knowledge of the local market. This can help the focal firm blend into the local market and attract less attention, as opposed to FDI which may be seen as more invasive. While contractual relationships do carry some risk, they are not necessarily more susceptible to volatility and risk compared to FDI. Focal firms may use contractual relationships as an entry strategy, but it is not necessarily an advanced one compared to FDI.

Question 14

An arrangement in which a contractor supplies managerial know-how to operate a hotel, hospital, airport, or other facility in exchange for compensation is known as offshoring.

Accepted Answer

The arrangement described in the statement is actually a form of outsourcing, which is different from offshoring. Offshoring involves moving a business function or process to another country to take advantage of lower costs or other benefits.

Question 15

When a firm allows others to use an entire business system in exchange for compensation, the arrangement is known as ________.
A) industrial design rights
B) franchising
C) joint venture
D) equity venture

Accepted Answer

The arrangement described in the question is franchising, where a firm grants a license to another party to use its entire business system (including processes, products, and trademarks) in exchange for compensation. Industrial design rights refer to the protection of a product's ornamental or aesthetic features. Joint ventures are partnerships between two or more parties to undertake a specific project or task, while equity ventures involve the exchange of ownership shares in two or more companies to form a new joint venture.

Question 16

A cross-border contractual relationship provides the focal firm with ________ over the foreign partner.
A) a low level of control
B) a moderate level of control
C) a high level of control
D) seldom any control

Accepted Answer

The answer of A cross-border contractual relationship provides the focal...

Question 17

Excluding noncompete clauses in employee contracts help prevent employees from serving competitors for some years after leaving the firm.

Accepted Answer

Excluding noncompete clauses means that employees are not restricted from working for competitors after leaving the firm.

Question 18

Laws that govern contractual obligations are uniform across countries, therefore, it makes contract enforcement abroad easier for firms.

Accepted Answer

Contractual laws vary between countries, meaning that contract enforcement abroad can be complex and difficult for firms. It is important for firms operating internationally to understand the legal frameworks of the countries in which they operate to ensure compliance and minimize legal risks.

Question 19

An industrial design is intended to ________.
A) eliminate the possibility of the design being copied
B) improve a product's performance and marketability
C) protect firms from intellectual property theft
D) protect information of commercial value

Accepted Answer

The purpose of an industrial design is to improve a product's performance and marketability by enhancing its aesthetic appearance, ergonomic design, and functionality. It is not primarily concerned with preventing theft or protecting confidential information, although it may indirectly contribute to those goals.

Question 20

Infringement of intellectual property is the unauthorized use or reproduction of products and services protected by a patent, copyright, trademark, or other intellectual property right.

Accepted Answer

This statement is true. Infringement of intellectual property involves using or reproducing products or services that are protected by various intellectual property rights without authorization from the owner of the rights.

Quiz 16: Licensing, Franchising, and Other Contractual Strategies

When consumers buy counterfeit goods, payments accrue to the firm that invented the product and not to illicit enterprises.

Under a build-operate-transfer (BOT) arrangement, a firm or consortium of firms contracts to build a major facility abroad and then transfers ownership to the project sponsor, typically the host-country government or public utility.

Which of the following is an example of licensing?

Treaties that support international protection of intellectual property harm developing economies due to high capital investment.

Where counterfeiting and piracy are commonplace, companies are reluctant to invent, innovate, and market legitimate products, which reduces consumer choices and ultimately lowers living standards.

________ is a fee paid periodically to compensate a licensor for the temporary use of its intellectual property, often based on a percentage of gross sales generated from the use of the licensed asset.

Which of the following is characteristic of cross-border contractual relationships?

Which of the following is an example of intellectual property?

The purpose of intellectual property rights is to ________.

In international leasing, a major advantage for the lessor is the ability to gain quick access to target markets, while putting assets to use earning profits.

Turnkey contracting is an arrangement in which the focal firm or a consortium of firms plans, finances, organizes, manages, and implements all phases of a project abroad and then hands it over to a foreign customer after training local workers.

A collective mark ________.

Which of the following is true about cross-border contractual relationship?

An arrangement in which a contractor supplies managerial know-how to operate a hotel, hospital, airport, or other facility in exchange for compensation is known as offshoring.

When a firm allows others to use an entire business system in exchange for compensation, the arrangement is known as ________.

A cross-border contractual relationship provides the focal firm with ________ over the foreign partner.

Excluding noncompete clauses in employee contracts help prevent employees from serving competitors for some years after leaving the firm.

Laws that govern contractual obligations are uniform across countries, therefore, it makes contract enforcement abroad easier for firms.

An industrial design is intended to ________.

Infringement of intellectual property is the unauthorized use or reproduction of products and services protected by a patent, copyright, trademark, or other intellectual property right.