An advantage of licensing to a company is that it ________, while the licensee gains production expertise or a well-known product without having to start from scratch.
A) does not maintain the same level of control over product quality
B) must send employees to work with the licensee in training, selling, and distribution
C) might create a competitor
D) gains entry to a foreign market at little risk
E) requires significant financial investment

Question

Quizplus · Accepted Answer

Licensing allows a company to gain entry into a foreign market with relatively little risk or investment. The licensee also gains production expertise or a well-known product without having to start from scratch. Option A is incorrect because licensors do maintain a level of control over product quality through licensing agreements. Option B is incorrect because sending employees to work with the licensee is not a requirement for licensing. Option C is incorrect because creating a competitor is a risk with any type of business arrangement, not just licensing. Option E is also incorrect because licensing typically requires less financial investment than other market entry strategies.

An Advantage of Licensing to a Company Is That It