Question 1

When a company wants to be compensated in a foreign subsidiary beyond its contribution in capital and managerial resources, it often ________.

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.

Question 2

Tom, a manager at an MNE, has been given the task of identifying a pool of companies with which the firm might form collaborative arrangements.Which of the following activities would be LEAST useful for Tom?

Accepted Answer

Constructing turnkey facilities does not relate to identifying a pool of companies for collaborative arrangements. It is more related to the physical construction or development of facilities. The other activities (attending technical conferences, monitoring industry journals, attending trade fairs) are all useful for gaining knowledge about the industry and identifying potential collaboration opportunities.

Question 3

When no single company has control over a collaborative arrangement, ________.

Accepted Answer

When no single company has control over a collaborative arrangement, it may lack direction as there is no single authority or decision-maker to guide the operation towards specific goals or objectives.

Question 4

When a company's primary motive for entering a collaborative arrangement is to learn from its partner, it is likely to ________.

Accepted Answer

If a company's primary motive for entering a collaborative arrangement is to learn from its partner, it is likely to "go it alone" after it has learned what it needs to know. This typically means that the company will not want to leave control to its partner and may prefer to terminate the collaboration once it has achieved its learning objectives. Disagreements over quality issues are always possible but are not necessarily a direct consequence of a learning-focused collaborative arrangement. A licensing agreement may be one option for the company, but it is not necessarily preferred or required.

Question 5

Turnkey projects generally differ from other forms of international business in that ________.

Accepted Answer

Turnkey projects are often located in remote areas because they involve setting up a complete facility or operation, which is then handed over to the client, often in locations where the client lacks the expertise or resources to build it themselves.

Question 6

A turnkey operation is a contract for the construction of an operating facility for a fee.

Accepted Answer

A turnkey operation is a type of contract where a company agrees to design, build, and fully equip a facility that is ready for immediate operation. The client pays a fee for this service, and the turnkey contractor is responsible for delivering the project on time and within budget.

Question 7

An international management contract is an agreement between a company and a foreign government on the number of foreign personnel it can employ.

Accepted Answer

An international management contract is actually an agreement between a company and a foreign government on the management of a specific project or operation. It typically includes details on responsibilities, timelines, and financial arrangements. It does not pertain to the number of foreign personnel the company can employ.

Question 8

What is a turnkey operation? What features generally make turnkey operations different from other collaborative arrangements?

Accepted Answer

The answer of What is a turnkey operation? What features...

Question 9

When a large company and a small company enter a collaborative arrangement, ________.

Accepted Answer

The small company is likely to be disadvantaged in legal disputes due to fewer resources and less bargaining power compared to the large company.

Question 10

The use of management contracts has been significant in hotel operations.

Accepted Answer

Management contracts have been widely used in the hotel industry to allow a management company to operate a hotel on behalf of the owner. This allows the owner to benefit from the expertise and resources of the management company without having to directly manage the hotel themselves.

Question 11

Explain how franchising agreements differ from licensing agreements.

Accepted Answer

The answer of Explain how franchising agreements differ from licensing...

Question 12

When a large company and a small company enter a joint venture, the large company is expected to contribute more to the arrangement.

Accepted Answer

In a joint venture, contributions are based on the agreement between the parties and not necessarily on the size of the companies. Each company contributes according to what has been negotiated, which could be resources, expertise, capital, or other assets, not just based on company size.

Question 13

Which of the following is LEAST likely to trigger the breakup of a joint venture?

Accepted Answer

Coming from different industries can often provide complementary capabilities and strengths to a joint venture, potentially enhancing its success. Therefore, it is less likely to trigger a breakup compared to the other options listed.

Question 14

An international joint venture is an agreement between two or more companies for the use of a trademark.

Accepted Answer

An international joint venture is an agreement between two or more companies to share ownership, control, and profits of a new business venture in a foreign country. It typically involves the creation of a new legal entity, rather than just the use of a trademark.

Question 15

Few turnkey projects to date have been in remote areas of the world.

Accepted Answer

Turnkey projects are common in remote areas of the world, especially for infrastructure, mining, and energy projects, where specialized expertise is required to develop and operationalize complex facilities.

Question 16

An agreement for the use of a trademark and assistance with business operations is known as a cross-licensing agreement.

Accepted Answer

A cross-licensing agreement is an agreement in which two or more parties grant each other licenses for their respective intellectual property. It does not necessarily involve assistance with business operations.

Question 17

What is the difference between licensing and cross-licensing? What factors do firms need to consider before entering into licensing agreements?

Accepted Answer

The answer of What is the difference between licensing and...

Question 18

When entering foreign countries, many franchisors encounter difficulty in transferring the domestic success factors of product and service standardization.

Accepted Answer

This is true as different cultures may have different preferences, tastes, and norms, leading to a need for adaptation and customization of the franchise model. Additionally, there may be differences in regulations, laws, and business practices that franchisors need to navigate when expanding internationally.

Question 19

The more partners in a joint venture, the more complex the management of the arrangement will be.

Accepted Answer

As more partners are involved in a joint venture, there are more opinions, interests, and objectives to consider, which can make communication and decision-making more challenging. Additionally, there may be more legal and financial complexities to manage.

Question 20

Lesser-known franchisors sometimes enter foreign countries with company-owned outlets.A reason for doing this is to ________.

Accepted Answer

Entering foreign countries with company-owned outlets allows lesser-known franchisors to establish their brand and demonstrate success, making the franchise opportunity more attractive to potential franchisees.

Quiz 15: Direct Investment and Collaborative Strategies