Jupiter Systems is a high-tech firm looking to set up operations in a foreign country. The firm's core competency is in technological know-how. Which of the following modes of entry would be most favorable to the firm if it wants to keep a tight control over its technology?
A)Wholly owned subsidiary
B)Joint venture
C)Franchising
D)Licensing
E)Turnkey project

Question

Quizplus · Accepted Answer

If a firm's competitive advantage (its core competence) is based on control over proprietary technological know-how, licensing and joint-venture arrangements should be avoided if possible to minimize the risk of losing control over that technology. Thus, if a high-tech firm sets up operations in a foreign country to profit from a core competency in technological know-how, it will probably do so through a wholly owned subsidiary.

Jupiter Systems Is a High-Tech Firm Looking to Set Up