Which of the following is an advantage of licensing as a mode of entry into foreign markets?
A) It helps a firm to realize substantial experience curve and location economies.
B) It gives the firm tight control over manufacturing, marketing, and strategy.
C) The licensor does not have to bear the development costs and risks associated with opening a foreign market.
D) Firms can easily maintain control over how their technological know-how is used by a licensee.
E) Licensing allows a foreign firm to use profits earned in one country to support competitive attacks in another.

Question

Quizplus · Accepted Answer

Licensing allows a firm to enter a foreign market without having to bear the significant costs and risks associated with developing that market. By licensing its technology, trademark, or patent to a foreign firm, the licensor can earn royalties without having to invest in manufacturing, marketing, or other aspects of the business. This is particularly advantageous for firms with limited resources or those that may not be as familiar with a particular foreign market. However, licensing does mean that the licensor may have limited control over how its technology or intellectual property is used and may not be able to fully capitalize on potential profits in the foreign market.

Which of the Following Is an Advantage of Licensing as a Mode