Question 1

A licensor must periodically renew its right to use intellectual property.

Accepted Answer

A licensor grants permission to use intellectual property, and the licensee must periodically renew the right to use it.

Question 2

Cross-border contractual relationships are used strictly in the manufacturing industry, especially in the computer and automobile industry.

Accepted Answer

Cross-border contractual relationships are used in various industries beyond manufacturing, including services, technology, finance, and more, to facilitate international trade and collaboration.

Question 3

After any technical information or assistance has been provided, the licensor usually continues to advise the licensee on management and marketing issues for the first few years.

Accepted Answer

The provision of technical information or assistance by the licensor typically focuses on the specific technology, product, or process being licensed, and does not automatically include ongoing advice on management and marketing issues unless specifically agreed upon in the licensing agreement.

Question 4

The relationships established in franchising arrangements are typically stable and long-lasting in comparison to licensing arrangements.

Accepted Answer

Franchising arrangements often involve a more comprehensive package of rights, support, and brand guidelines, leading to a more stable and long-term relationship compared to licensing arrangements, which are generally more limited in scope and duration.

Question 5

Master franchising accounts for a small percentage of international franchising arrangements because franchisors dislike the lack of control over their products and services.

Accepted Answer

Master franchising is actually a popular method for international expansion because it allows franchisors to grow their brand in foreign markets with the help of a local partner who understands the market, despite the potential for reduced direct control.

Question 6

Foreign laws regarding franchising may affect royalty payments and a franchisor's control over the products and services sold by its franchisees.

Accepted Answer

Foreign laws can indeed impact the terms of franchising agreements, including royalty rates and the degree of control a franchisor has over its franchisees, due to variations in legal systems, business practices, and regulatory environments across different countries.

Question 7

U.S.-based franchises, such as McDonald's, ensure consistency in their food by shipping all the necessary ingredients from the United States and avoiding unreliable suppliers in foreign markets.

Accepted Answer

U.S.-based franchises like McDonald's adapt to local markets by sourcing many ingredients locally to reduce costs and support local economies, while still maintaining their quality standards through strict supplier guidelines.

Question 8

Management contracts are especially useful in markets that lack skilled local workers to oversee large scale facilities, such as airports and hospitals.

Accepted Answer

Management contracts allow a company to hire external management teams with the necessary expertise to operate complex facilities efficiently, compensating for the lack of local skilled workers.

Question 9

Each of the following is a type of intellectual property except ________.

Accepted Answer

All the options listed (A, B, and C) are types of intellectual property. An industrial design, a patent for a new invention, and an author's unpublished book are all protected under intellectual property laws.

Question 10

All of the following are typical characteristics of cross-border contractual relationships except ________.

Accepted Answer

Cross-border contractual relationships often involve the exchange of intellectual property and services, allow firms to be flexible, and can generate earnings from foreign operations. However, they typically provide a lower level of control compared to direct investment methods such as owning a subsidiary, making choice D the exception.

Question 11

How can a cross-border contractual relationship help focal firms with public relations issues?

Accepted Answer

A local partner can help shield the multinational enterprise (MNE) from criticism by leveraging their understanding of local norms and practices, thus improving public relations.

Question 12

What is the purpose of a firm integrating an industrial design into a product?

Accepted Answer

Integrating an industrial design into a product primarily aims to improve its performance and marketability by making it more appealing and functional for consumers.

Question 13

Which of the following is not a geographical indication?

Accepted Answer

Geographical indications (GIs) are signs used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin. Champagne, California Raisins, and Florida Oranges are all examples of products that are associated with a specific region and possess unique qualities tied to their geographical origin. "Made in China" is not a geographical indication; it is a broad manufacturing origin label that does not signify a specific quality, reputation, or other characteristics attributable to a geographical origin.

Question 14

The purpose of intellectual property rights is to ________.

Accepted Answer

Intellectual property rights are designed to give creators and inventors exclusive rights to their creations for a certain period, allowing them to potentially dominate a market with their innovation. This exclusivity encourages innovation by providing a financial incentive.

Question 15

Why are licensing agreements in foreign markets beneficial to Disney?

Accepted Answer

Licensing agreements allow Disney to leverage its brand and intellectual property by permitting licensees to use Disney logos and characters on products that cater to local tastes and preferences, thus meeting customer needs more effectively in various markets.

Question 16

Which of the following items is most likely not an example of a trademark licensing agreement?

Accepted Answer

A trademark licensing agreement involves the use of a trademark, logo, brand name, or character on products, but a collection of short stories by Stephen King is an example of copyright, not trademark licensing.

Question 17

Which of the following is most likely not protected under copyright laws?

Accepted Answer

The Nike swoosh is a trademark, not a copyright. Copyright laws protect original works of authorship, while trademarks protect symbols, names, and slogans used to identify goods and services.

Question 18

Which of the following companies earns the largest amount of annual licensing revenues?

Accepted Answer

Disney Consumer Products, a division of The Walt Disney Company, earns the largest amount of annual licensing revenues among the options listed. Disney's vast portfolio of intellectual properties, including those from Marvel Entertainment and Lucasfilm, contributes to its leading position in licensing revenues globally.

Question 19

Which of the following products would not be an example of know-how licensing?

Accepted Answer

Know-how licensing typically involves technical knowledge or expertise, which applies to semiconductors, drugs, and industrial patents. Harry Potter eyewear is more related to brand licensing.

Question 20

Why is licensing most likely a preferred method of foreign market entry for SMEs?

Accepted Answer

Licensing is often preferred by SMEs because it allows them to enter foreign markets with minimal capital investment and without the need for a significant physical presence in the market. This method enables SMEs to leverage their intellectual property while minimizing the risks and costs associated with establishing overseas operations.

Quiz 12: Licensing, Franchising, and Other Contractual Strategies