Firms that lack the capital necessary to develop foreign operations may choose _____ as a means of expanding internationally.

Question

Quizplus · Accepted Answer

Licensing allows firms to grant foreign companies the right to use their intellectual property, technology, or products for a fee, without having to invest significant capital in foreign operations. This method can be beneficial for companies that lack the financial resources to expand globally. Turnkey projects are a form of contract manufacturing where a firm designs and constructs a facility abroad and hands it over to a foreign company after completion, which may require significant capital. Greenfield investments involve building new facilities from scratch in foreign countries, which also requires substantial capital. Acquisitions may be an option, but they typically involve a significant initial outlay of capital. Therefore, licensing is the best choice for firms with limited capital.

Firms That Lack the Capital Necessary to Develop Foreign Operations