Understanding Franchising Models
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Questions and Answers

What is one advantage of licensing discussed in the text?

  • Facilitates entry into a foreign market with low investment (correct)
  • Allows full control over the licensee
  • Results in immediate capital investment
  • Reduces exposure to government intervention

What is a disadvantage of licensing mentioned in the text?

  • Licensee may become a partner
  • Increases protection of intellectual property rights
  • Limited participation returns (correct)
  • Licensee provides expertise

What is special about contract manufacturing in the context of licensing?

  • Allows companies to manufacture their own products
  • Company provides technical specifications to a subcontractor (correct)
  • Contractors are responsible for design and marketing
  • Enables companies to focus solely on marketing

In franchising, what does the franchisee receive from the franchisor?

<p>A business to operate (B)</p> Signup and view all the answers

What kind of licensing permits the use of celebrity names or logos on merchandise?

<p>Trademark licensing (B)</p> Signup and view all the answers

How are fees typically structured in trademark licensing agreements?

<p>7-12 percent of net sales (B)</p> Signup and view all the answers

What is the purpose of a licensing agreement?

<p>To permit the use of intellectual property in exchange for compensation (A)</p> Signup and view all the answers

Which of the following is NOT typically included in a licensing agreement?

<p>Market share (B)</p> Signup and view all the answers

Why is licensing considered advantageous for the licensee?

<p>It provides additional profitability with little initial investment (B)</p> Signup and view all the answers

What does a licensing agreement help in circumventing?

<p>Export barriers like tariffs and quotas (A)</p> Signup and view all the answers

Which factor influences the choice of marketing entry strategy according to the text?

<p>The attitude toward risk (A)</p> Signup and view all the answers

What does 'ROI' stand for in the context of licensing agreements?

<p>Return on Investment (B)</p> Signup and view all the answers

What is the purpose of a Strategic Alliance?

<p>To share business objectives with other companies (A)</p> Signup and view all the answers

Which type of investment involves acquiring an existing enterprise?

<p>Merger with an existing enterprise (D)</p> Signup and view all the answers

What does a Management contract in a Strategic Alliance involve?

<p>Providing integrated services without ownership risk (D)</p> Signup and view all the answers

Which airline alliance is mentioned as a Global Strategic Partnership (GSP)?

<p>Star Alliance (D)</p> Signup and view all the answers

What is the primary advantage of forming a Strategic Alliance?

<p>To spread the cost and risk inherent in production (C)</p> Signup and view all the answers

In the context of investment, what does Greenfield investment involve?

<p>Starting new operations on vacant land (C)</p> Signup and view all the answers

What is a reason for Foreign Direct Investment related to marketing factors?

<p>To maintain and increase sales (A)</p> Signup and view all the answers

How does 'Derived demand' in Foreign Direct Investment occur?

<p>By creating a chain of direct investment in a market (B)</p> Signup and view all the answers

Which type of ownership in Foreign Direct Investment results from ethnocentric considerations?

<p>Full ownership (A)</p> Signup and view all the answers

What is a non-financial incentive provided by governments to attract foreign investors?

<p>Protection from competition through tariffs (D)</p> Signup and view all the answers

Why is 'fairness' of profit repatriation a major concern in Foreign Direct Investment?

<p>To evaluate the extent firms reinvest into foreign operations (D)</p> Signup and view all the answers

What positive aspect is associated with Foreign Direct Investors according to the text?

<p>Transferring technology and managerial skills (A)</p> Signup and view all the answers

What is the main focus of product/trade franchising?

<p>Emphasizing the product to be sold (D)</p> Signup and view all the answers

Which aspect is NOT a reason for global franchising?

<p>Government intervention (B)</p> Signup and view all the answers

What is a common concern in franchising according to the text?

<p>Protection of the total business system (C)</p> Signup and view all the answers

What does Foreign Direct Investment (FDI) involve?

<p>Creating or expanding a long-term interest in an enterprise with some control (D)</p> Signup and view all the answers

What form can Foreign Direct Investment (FDI) take?

<p>Joint ventures, minority or majority equity stakes, outright acquisition (B)</p> Signup and view all the answers

What did IKEA spend in Russia for its affordable furniture and housewares?

<p>$2 billion (B)</p> Signup and view all the answers

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