Licensing is a useful form of market entry when companies lack the resources to establish independent operations in foreign markets.

Question

Quizplus · Accepted Answer

Licensing allows a company to enter a foreign market without the costs and risks associated with establishing independent operations, which can be particularly useful for companies with limited resources. By licensing its technology or products to a local company, the licensor can benefit from the local partner's knowledge, infrastructure, and marketing expertise, while still maintaining control over its intellectual property. This approach can also help companies overcome regulatory hurdles, cultural barriers, and other obstacles to doing business in foreign countries. However, licensing may not always be the best choice, as it can limit a company's growth potential, expose it to legal and reputational risks, and undermine its long-term competitiveness.

Licensing Is a Useful Form of Market Entry When Companies