Podcast
Questions and Answers
What is a major advantage of International Licensing?
What is a major advantage of International Licensing?
- Shared revenues
- Increased complexity
- Higher financial risk
- Low financial risk (correct)
Which of the following is a disadvantage of International Franchising?
Which of the following is a disadvantage of International Franchising?
- Shared revenues
- Increased quality control
- Learning opportunities
- Increased complexity (correct)
What is the main benefit of Foreign Direct Investment (FDI)?
What is the main benefit of Foreign Direct Investment (FDI)?
- Reduced control
- Profit potential (correct)
- Increased economic risks
- Reduced profit potential
Which of the following is a type of Foreign Direct Investment?
Which of the following is a type of Foreign Direct Investment?
What is a disadvantage of the Greenfield Strategy?
What is a disadvantage of the Greenfield Strategy?
Which of the following is an advantage of International Licensing?
Which of the following is an advantage of International Licensing?
What is a challenge of Foreign Direct Investment (FDI)?
What is a challenge of Foreign Direct Investment (FDI)?
Which of the following is not a type of Foreign Direct Investment?
Which of the following is not a type of Foreign Direct Investment?
What is a primary advantage of exporting over foreign direct investment?
What is a primary advantage of exporting over foreign direct investment?
What motivates a firm to enter foreign markets due to opportunities available there?
What motivates a firm to enter foreign markets due to opportunities available there?
What type of exporting involves selling products directly to customers in foreign markets?
What type of exporting involves selling products directly to customers in foreign markets?
What involves the transfer of products within a company's own subsidiaries or affiliates?
What involves the transfer of products within a company's own subsidiaries or affiliates?
What allows a firm to utilize the resources and expertise of a foreign partner?
What allows a firm to utilize the resources and expertise of a foreign partner?
What involves the production of goods by a foreign company according to the specifications of the licensing firm?
What involves the production of goods by a foreign company according to the specifications of the licensing firm?
What type of international business involves the right to produce and sell a company's products in a foreign market?
What type of international business involves the right to produce and sell a company's products in a foreign market?
What is a primary disadvantage of exporting?
What is a primary disadvantage of exporting?
What is one of the primary advantages of Foreign Direct Investment (FDI)?
What is one of the primary advantages of Foreign Direct Investment (FDI)?
What is the primary role of an export intermediary?
What is the primary role of an export intermediary?
What is one of the advantages of international franchising?
What is one of the advantages of international franchising?
What is contract manufacturing?
What is contract manufacturing?
What are the three basic forms of Foreign Direct Investment (FDI)?
What are the three basic forms of Foreign Direct Investment (FDI)?
What is one of the disadvantages of international licensing?
What is one of the disadvantages of international licensing?
Study Notes
International Business: Entry Modes and Strategies
International Licensing
- Low financial risk
- Market assessment opportunities
- Sales opportunities
- Disadvantages: limited market opportunities, potential litigation, competitive issues
International Franchising
- Product and system reputation
- Low-cost expansion opportunities
- Learning opportunities
- Disadvantages: shared revenues, increased complexity, quality control issues
Foreign Direct Investment (FDI)
- Benefits: increased control, profit potential, local factories
- Challenges: economic risks, political risks, operating complexity, government policies
Greenfield Strategy
- Disadvantages: implementation takes time, location may be costly, government regulations, recruiting and training local workforce, stigma as a foreign firm
Exporting to Foreign Markets
- Primary advantages: relatively low financial exposure, gradual market entry, acquiring knowledge about local market
- Primary disadvantages: vulnerability to tariffs and non-tariff barriers, logistical complexities, potential conflicts with distributors
Motivations for Exporting
- Proactive motivations: opportunities available in foreign markets
- Reactive motivations: decreasing opportunities in domestic market
Forms of Exporting
- Indirect exporting
- Direct exporting
- Intracorporate transfers
Acquisition Strategy
- Advantages: control over resources, generates immediate revenues, adds no new capacity to the industry
- Disadvantages: assumes the firm's liabilities, inherits unresolved problems, requires substantial upfront spending
Joint Ventures
- Jointly-owned separate firm
- Promotes mutual interest
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Description
Learn about the advantages and disadvantages of international licensing, including low financial risk, market assessment, and sales opportunities. Understand the potential drawbacks, such as limited market opportunities and competitive issues.
