Understanding Franchising Models

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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?

A business to operate Signup and view all the answers

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

Trademark licensing Signup and view all the answers

How are fees typically structured in trademark licensing agreements?

7-12 percent of net sales Signup and view all the answers

What is the purpose of a licensing agreement?

To permit the use of intellectual property in exchange for compensation Signup and view all the answers

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

Market share Signup and view all the answers

Why is licensing considered advantageous for the licensee?

It provides additional profitability with little initial investment Signup and view all the answers

What does a licensing agreement help in circumventing?

Export barriers like tariffs and quotas Signup and view all the answers

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

The attitude toward risk Signup and view all the answers

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

Return on Investment Signup and view all the answers

What is the purpose of a Strategic Alliance?

To share business objectives with other companies Signup and view all the answers

Which type of investment involves acquiring an existing enterprise?

Merger with an existing enterprise Signup and view all the answers

What does a Management contract in a Strategic Alliance involve?

Providing integrated services without ownership risk Signup and view all the answers

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

Star Alliance Signup and view all the answers

What is the primary advantage of forming a Strategic Alliance?

To spread the cost and risk inherent in production Signup and view all the answers

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

Starting new operations on vacant land Signup and view all the answers

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

To maintain and increase sales Signup and view all the answers

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

By creating a chain of direct investment in a market Signup and view all the answers

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

Full ownership Signup and view all the answers

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

Protection from competition through tariffs Signup and view all the answers

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

To evaluate the extent firms reinvest into foreign operations Signup and view all the answers

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

Transferring technology and managerial skills Signup and view all the answers

What is the main focus of product/trade franchising?

Emphasizing the product to be sold Signup and view all the answers

Which aspect is NOT a reason for global franchising?

Government intervention Signup and view all the answers

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

Protection of the total business system Signup and view all the answers

What does Foreign Direct Investment (FDI) involve?

Creating or expanding a long-term interest in an enterprise with some control Signup and view all the answers

What form can Foreign Direct Investment (FDI) take?

Joint ventures, minority or majority equity stakes, outright acquisition Signup and view all the answers

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

$2 billion Signup and view all the answers