Flashcards. Licensing is governed by a licensing agreement, which involves a one-time transfer of property or rights for a fee. Franchising is an example of a contractual vertical marketing system. 16 Licensing, Franchising, and Other Contractual Strategies. For example, Ranbaxy has licensing arrangement in countries like Indonesia and Jordan. Verified Answer for the question: [Solved] Before undertaking contractual entry strategies abroad, management _____. Chapter 8: Global Products. There are two major types of market entry modes: equity and non-equity. When considering a venture in international markets, there are some significant tactical and strategic decisions to be effected. Study Licensing, franchising and other contractual strategies (Key Terms) flashcards from Lewis Mellor's class online, or in Brainscape's iPhone or Android app. Licensing: Licensing offers several benefits for both the licensor and the licensee. Advantages. A) Nickelodeon B) The Walt Disney Company C) Mattel D) Major League Baseball Services Discover Topics Ask a questionVerified Answer for the question: [Solved] To minimize the complexity of franchising, focal firms must ________. Licensing is an arrangement by which the owner of intellectual property grants another. Franchising is an arrangement in which the. Study Licensing, franchising and other contractual strategies (Key Terms) flashcards from Lewis Mellor's class online, or in Brainscape's iPhone or Android app. Learn faster with spaced repetition. contractual agreements. licensing is the limitation placed on licensing agreements. Royalties. Moderate-Control Strategies (Licensing, Franchising and other Contractual Strategies, Project Based (non-equity) collaborative ventures) "Moderate": -control available to the focal firm over foreign operations. B. Essentially, you need to decide whether you want to buy a franchise or own your own business while pursuing licensing opportunities. Franchising. Foreign Direct Investment and Collaborative Ventures; 15. 3. [2] defined market entry as "a planned move into a new or adjacent market for the creation and delivery of offerings. 1. Learn from your partner (and apply that knowledge within your organization) Study Chapter 5: Entry into Foreign Markets flashcards. Includes such knowledge-based assets of the firm or individuals as industrial designs, trade secrets, inventions, works of art, literature, and other "creations of the mind". 15. agreement, the multinational firm grants rights on its intangible property, like technology or a brand name, to a. Contract usually runs five to seven years and is renewable at option of parties. Contractual entry strategies in international business are cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed by an. Terms: a. Licensing. Contractual Entry Modes 3. The Five Common International-Expansion Entry Modes. Foreign. The most use contractual entry modes are Licensing, Franchising and Turnkey projects which is going to be explained below. Several strategies for franchising in East. Exporting falls within the broad umbrella of market entry strategies that include a range of approaches to build international markets for your business. 70. School Anadolu University; Course Title BUS 1332; Type. View Chapter 16. International Business: The New Realities, 4e (Cavusgil) Chapter 15 Licensing, Franchising, and Other Contractual Strategies 1) _d. Your matched tutor provides personalized help according to your question details. Licensing is governed by a licensing agreement, which involves a one-time transfer of property or rights for a fee. B)It is an ownership-based international business activity. In franchise, a franchiser sells a property to the franchisee but controls over the procedures of the business. 1 Explain contractual entry strategies. True. In a build operate transfer agreement how does the business that built the facility ensure that they profit from the agreement?, Test Your Comprehension, 15-9. Licensing, Franchising, and Other Contractual Strategies Learning Objectives • Explain contractual entry strategies. Licensing typically involves royalties or. • Understand licensing as an entry strategy. Change Product. Internal: Operational. Licensing and franchising are two international market entry strategies that businesses can use to expand their operations. It described the development of Chinese hotel industry at the end. Franchising. Licensing. Licensing: An arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified period of time in exchange for royalties or. Study with Quizlet and memorize flashcards containing terms like Contractual entry strategies in international business are cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed by an explicit contract. Quiz 15: Licensing, Franchising, and Other Contractual Strategies. nontariff barrier d. For courses in international business. The difference between a franchise contract and a licensing contract is that a. The principal advantages of international franchising are: (i) Franchising is a beneficial way to. Table 7. Second, some firms find it less risky and more profitable to export. Management Service Contracts A management service contract is a long-term agreement, of up to ten years or even longer, whereby the legal owners of the property and real estate enter into a. 2Understand licensing as an entry strategy. . Merger and Acquisition ii. Click the card to flip 👆. contractor supplies managerial know how. Licensing is an arrangement by which the owner of intellectual property grants another firm the right to use that property for a specific time period in exchange for royalties or other compensation. What is Licensing and Franchising? Licensing is a contractual agreement in which one company provides another company in foreign country access to its patents, trade secrets, or technology in exchange for a fee known as a royalty. Unique aspects of contractual relationships. cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an explicit. Read other and watch their success stories!. Direct exporting. is defined as a contractual arrangement whereby one company makes a legally protected asset available to another company in exchange for some form of compensation. When a firm allows others toIn Malaysia, franchising and licensing are governed under different laws. In the franchising packages trademarks, copyright, patents and other things often are included. Licensing, Franchising and other contractual strategies. Licensing •A contractual agreement whereby one company (the licensor) makes an asset. First, mature products in a domestic market might find new growth opportunities overseas. Franchising requires ongoing assistance from the franchiser while licensing normally involves a one-time transfer of. Franchising and licensing both offer business opportunities with some of the work already done for you, but that doesn't mean they're exactly the same. Chapter 16 - Licensing, Franchising and other Contractual Strategies. View Chapter 16 & 17 MAN 3600 from MAN 3600 at Florida State University. Licensing gives a company greater control than franchising over the sale of its product in a target market. Multiple Choice . Franchising is an advanced form of licensing in which the the franchisor allows the franchisee, the right to use an entire business system in exchange for compensation. It can be classified into three major forms-. Switching costs: A. Fast entry, low risk. Studying is made a lot easier and more fun with our online flashcards. Unique Aspects of Contractual Relationships. A franchise is a business model in which a business owner licenses their business to another individual or organization. Licensing vs Franchising The primary difference between a franchisee and a licensee is that franchisees can expect to have a much closer. 4. Solved . Why would a company choose to use a contractual mode of entry rather than an investment mode? Contractual forms of entry (i. B) They are more susceptible to volatility and risk compared to FDI. Discover. Franchising VS Licensing. D) strategic decision making. On the flip side, potential for revenue growth is more limited because the parent company will only earn a percentage of the earnings from each new store. E) adaptation for local. Joint venture iii. Match. Similarly, explicit contracts define franchising relationships. if the franchisor has already achieved considerable success in franchising in its domestic market. S. Royalties. 4. Type of Entry. Posted by Rully Mangunsong at 10:16 AM. 15. and industry experts about instructions to franchise your business. In this chapter, we address various types of cross-border contractual relationships, including licensing and franchising. View Test Prep - licensing and franchising from ECONOMICS 12 at Xavier Institute Of Management & Research. Licensing agreement specifies nature of relationship between licensor and licensee. Direct exporting is often considered the default choice for new market entry. and popular strategies for business expansion. While deciding between franchising vs. • Contractual entry strategies (franchising, licensing, management. An MNC may move into that mode voluntarily (to test the waters, so to speak) or for purely defensive reasons (to prevent a competitor from entering the market or to preserve sales that otherwise would be lost because of a. intellectual property Ideas or works that individuals or firms create, including discoveries and inventions; artistic, musical, and literary works; and words, phrases, symbols, and designs. Licensing is designed to reduce the risks involved in doing business for everyone involved. Learn. docx from INT- 113 at Southern New Hampshire University. The difference between licensing and franchising is that franchise agreements involve an extensive business relationship between franchisor and franchisee whereas license agreements are limited and relate to a. 1. External: Operating Enviornment. In addition to the standard license process, a company will assist in establishing the business with the design, equipment, organization, and marketing. Turnkey projects 3. This strategy is based on franchising, the market entry mode, Subway used in order to enter foreign markets. One could say that franchising is a special type of licensing arrangement inContractual Entry Modes A company can use a variety of contracts such as : licensing, franchising, management contracts, and turnkey projects to market highly specialized assets and skills in markets beyond its nation’s border. Patents provide inventors the right to prevent another person or company from selling or using an invention for up. Learn faster with spaced repetition. International Business: The New Realities, 5th Edition caters to a post-millennial student audience, the most diverse and educated generation to date. Ensuring ongoing competitive advantage. ) Finding financing for a new business in other countries. Importing involves purchasing products from other countries and reselling them in one’s own. Licensees "rent" the brand from the owner, but are then expected to use their own expertise, capabilities and resources to innovate, produce, market and sell the. • Describe. Contractual Entry Strategies of Licensing and Franchising: 1. turnkey contracting. Firms can pursue them independently or in conjunction with other entry strategies. • About 70 percent of the more than 2,000 Body Shop stores worldwide are operated by franchisees, while the rest are owned by Body Shop headquarters. A) should bribe government officials to ensure protection of intellectual property B) should register patents and copyrights with local governments C) should keep information about intellectual property confidential from all franchisees in. Partnering, licensing, franchising, joint venture creation, business acquisition, and Greenfield ventures represent the spectrum of market entry opportunities. Study with Quizlet and memorize flashcards containing terms like Contractual entry strategies in IB, Licensing def, Licensing pro and more. Chapter 16 – Licensing, Franchising, and Other Contractual Strategies I. Test. Match. Footnote 3 We assume that the entering firm E and the domestic incumbent I have identical and constant marginal cost c if firm E uses the FDI strategy. Methods for General Eintrittspreis into the Total Marketplace. Question 74. 15 Licensing, Franchising and Other Contractual Strategies. They are governed by a contract that provides the focal firm a moderate level of control over the foreign partner. After few years, once the know- how is transferred, there is a risk that the foreign firm may begin to act on its own and the international firm may therefore. management contracts. Licensing: An arrangement in which the owner of intellectual property. Study with Quizlet and memorize flashcards containing terms like Build-operate-transfer (BOT), contractual entry strategies in international business, Intellectual Property and more. Study with Quizlet and memorize flashcards containing terms like Contractual entry strategies in international business, Intellectual property, Licensing and more. Franchising, on the other hand, is a business expansion model where a franchisor grants the rights. If you want to have more autonomy in business decisions with the freedom to make your own vision. The impact of strategy considerations can most easily be illustrated in a Cournot duopoly setting as displayed in Fig. Question 1. Bashar Hassan. intellectual property. A franchised. While franchising involves a more comprehensive relationship in which the franchisor provides ongoing support and guidance to the franchisee in addition to granting the right to use its business model and brand. A patent exclusively refers to a distinctive design, symbol, logo, word, or series of words placed on a product label. Licensing refers to a business arrangement, where a company (licensor) sells its intellectual property to another company (licensee), or the right to produce its products, for a specified fee (royalty). Key Challenges Faced by the Franchisee is the Decreased Likelihood. Match. Study with Quizlet and memorize flashcards containing terms like What does a contractual entry strategy in IB mean, Give forms of IP, What are the types of contractual relationships and more. b. BUS 325 Ch. focal firm does everything for business and hands it over to customer after training. LICENSING AND FRANCHISING . Licensing is a contractual agreement whereby one company (the licensor) makes a legally protected asset available to another company (the license) in exchange for royalties, license fees, or some other form of compensation. Flashcards. With the export strategy the marginal cost of firm E is higher due to. University University of. BUS. trademark. Licensing, Franchising, and Other Contractual Arrangements Michael Z. - includes exchange of intangibles and services. firm. Arrangement in which the firm allows another the right to use an entire business system in exchange for fees, royalties, or. IBUS CH 15 Licensing, Franchising, and Other Contractual Strategies. Study Licensing, franchising and other contractual strategies (Key Terms) flashcards from Lewis Mellor's class online, or in Brainscape's iPhone or Android app. patent. 1 International Entry Modes 7. Test. Unique Aspects of Contractual Relationships. Governed by a contract that provides the focal firm with a moderate level of control over the foreign partner. B) It ensures payment from the licensee to the licensor upon receipt of an export shipment. chapter 16 licensing, franchising, and other contractual contractual entry strategies in international business: exchanges where the relationship between the. Study Resources. S. International Business: The New Realities, 4e (Cavusgil) Chapter 15 Licensing, Franchising, and Other Contractual Strategies _____ is a fee paid periodically to compensate a licensor for the temporary use of its intellectual property, often based on a percentage of gross sales generated from the use of the licensed asset. • Franchising vs licensing – Licensing of IPRs is an element of franchising – Licensing of IPRs is the means to reach the end • Goals of franchising – For the franchisor: geographically expand its busi ness without taking financial risks – For the franchisee: benefit from the brand, experi ence and know-how of the franchisor FranchisingSTRATEGY AND OPPORTUNITY ASSESSMENT FOR INTERNATIONAL BUSINESS; 11. Licensing specifies the territory as well as period. cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an explicit contract intellectual property ideas or works created by individuals or firms, including discoveries and inventions; artistic, musical, and literary works; and words, phrases, symbols, and designs They are governed by a contract that provides the focal firm with moderate level of control over the foreign partner They typically include the exchange of intangibles and services Firms can pursue them independently or in conjunction with other entry strategies They provide dynamic, flexible choice They often reduce local perceptions of the. when the franchisor has been successful domestically because of unique products and advantageous operating procedures and systems. Franchising; Meaning: This is a contractual agreement in which one firm gets access to another firm’s patent, technology and other things in exchange for money. Verified Answer for the question: [Solved] _____ is a fee paid periodically to compensate a licensor for the temporary use of its intellectual property, often based on a percentage of gross sales generated from the use of the licensed asset. A. 99/year Quiz 15: Licensing, Franchising, and Other Contractual Strategies. Similar to exporting, licensing is an easy way for a company to enter an international market quickly and without the need for laying out much capital. 5 Contract Manufacturing 7. Similar to a licensing agreement, under a franchising agreement, the multinational firm grants rights on its intangible property, like technology or a brand name, to a foreign company for a specified period of time and receives a royalty in return. Switzerland is a country that has revaluated its currency—this does not happen often. Advantages:The commercial center does this by familiarizing U. In deciding which method to adopt, it is important that a firm evaluate each entry mode’s. BUS MISC. 15. In order to prevent a licensor-competitor from gaining unilateral benefit, licensing agreements should provide for: A) contract manufacturing. Created by. firms with industries, markets, and customs in other countries. An industrial design is intended to _____. A license allows the licensee to use, make and sell an idea, design, name, or logo for a fee. licensing. -the amount of equity required affects the risk,return, and control that it will have in. e. Study with Quizlet and memorize flashcards containing terms like Licensing, franchising and other contractual strategies are considered _____ control strategies, Contractual Relationships between a focal firm and a foreign partner are, Intellectual Property refers to and more. Multiple Choice . Terms in this set (12) Contractual entry strategies in international business. Exporting entails selling products to foreign customers. management contracts. Chapter 3 described the approach and methodsUnformatted text preview: 446 Chapter l6 Licensing, Franchising, and Other Contractual Strategies l Include noncompete clauses in employee contracts for all positions to prevent employees from serving competitors for up to three years after leaving the firm. 3. A strategic alliance is a collaborative agreement between two or more companies to pursue mutually beneficial objectives. Two Types of Contractual Relationships. economic output and, depending on your needs, goals and circumstances, may be the right choice for you. Skip until Main Content. Although both franchising and MSCs are non-equity modes, there are important differences between. View final ch 15 man3600. Typically, this licence will cover know-how and other confidential information, trademarks. Low control, low local knowledge, potential negative environmental impact of transportation. In some cases, it’s either for five years or can be for 20 years. strategic alliances. The specific definition of the license. Licensing A contractual agreement whereby one company (the. Flashcards. Learn from your partner (and apply that knowledge within your organization) Study Chapter 5: Entry into Foreign Markets flashcards. Solved . turnkey contracting. Franchising is a variation of licensing strategy in which there is a contract between the parent company franchiser. commercial centers provide the following services: business facilities; translation and clerical services; a commercial library with legal information; and assistance with contracts and export/import arrangements. Correct Answer: Access For Free . Equity relations allow firms to have some direct control, while contractual does not. A) A joint venture B) Contract manufacturing C) Licensing D) Exporting E) A Global strategic alliance; Answer: B. _____ these are the items owned by a franchisee that has the same monetary value. the firm enters a foreign market before other foreign firms - this is a proactive strategy. Test. Chapter 15. a. Franchising allows franchisors to function effectively with a much leaner organization. Geb 3375 Introduction to International Business – Study Guide Exam 3_ Part1 1 Introduction to International Business Study Guide Exam 3 – Part 1 Chapter 16: Licensing, Franchising and other Contractual Strategies With this chapter we continued the “entry strategies” part we had interrupted for exam 2. Learn the differences between licensing and franchising and why licensing is not an optional to franchising. 15. Get Quality Help. Chapter 15: Licensing, Franchising, and Other Contractual Strategies Key Elements Contractual Entry strategies in. Licensing, Franchising and other Contractual Strategies. Match. Which of the following is provided by the licensor in a licensing agreement? A) a monetary down-payment plus royalties for all products sold. Two Types of Contractual Relationships. 3 Describe the advantages and disadvantages of licensing. Fast entry, low risk. chesiebels. cross-border contractual relationships share several common characteristics. In other words, a licensing agreement grants the licensee the ability to use intellectual. master franchise. Ask AI New. d. cross-border exchanges in which relationship between focal firm and foreign partner is governed by explicit contract. b. The article concludes by examining implications of this firm resource model of sustained competitive advantage for other. 1Explain contractual entry strategies. On the other hand, franchise agreements allow the use of trademarks, additional intellectual. 47 I Use contemporary technology to minimize counterfeiting. The firm that grants such authorization to the other firm is known as the licensor, and the firm in the foreign. Licensing, Franchising, and Other Contractual Strategies 438 Part 5 Functional Area Excellence 464 16. Licensees can re-sell the IP at a higher price or manufacture merchandise with the IP on it. 6 billion in revenues. Another popular way to expand overseas is to sell franchises. Some companies use direct exporting, in which they sell the product they manufacture in international markets without third-party. Study with Quizlet and memorize flashcards containing terms like Contractual entry strategies in international business are cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed by an explicit contract T/F, Exporting and foreign direct investing are two common types of contractual entry. Ch 16: Licensing, Franchising, and other Contractual Strategies. Lisanslama, Franchising ve diğer Sözleşme Stratejileri Learn with flashcards, games, and more — for free. 15. Franchising is another variation of licensing strategy. Market entry modes for international businesses. Question 2. Patent licensing is one of the most expensive licensing. Many Indian firms can use licensing or franchising of the overseas market, particularly the developing countries. Learn. External: Operating Enviornment. in exchange for royalties, license fees, or some other form of compensation Patent Trade secret Brand name Product formulations. According to Franchise Business Review, franchising fees typically range from $25,000-$50,000 on average. Find Flashcards. Licensing and Franchising. Franchisor may impose inappropriate technical or managerial systems on the franchisee. contract manufacturing. 6 Joint Ventures Chapter 8. Flashcards. embargo, In the context of various strategies for reaching global markets, which of the following strategies. A. Licensing: Arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified period of time in exchange for royalties or other compensation. Keep in mind, however, this is strictly the franchise fee and doesn’t include other startup costs to open the. Email This BlogThis! Share to Twitter Share to Facebook Share to Pinterest. gives an inventor the right to prevent others from using or selling an invention for a fixed period-typically up to 20 years. C) The licensee cannot cancel the contract with the. the inherent disadvantages foreign firms experience in home countries. Licensing & Franchising The major drawback of licensing is the problem of controlling the licensee due to the absence of direct commitment from the international firm granting the licence. Similar to a licensing agreement, under a franchising Granting rights on an intangible property, like technology or a brand name, to a foreign company for a specified period of time and receiving a royalty in return. Learn this differs between licensing and franchising and why general is not an alternative for franchising. Marketing in the Global Firm 464 17. Franchising. 82. Quiz 15: Licensing, Franchising, and Other Contractual Strategies Solved Professional Service Firms, Such as PriceWaterhouseCooper, Often Enter Large InternationalLike international licensing, international franchising has certain advantages and disadvantages. 2. These options vary in terms of how much. 6 Understand other contractual entry strategies. " Early market entry is generally considered a competitive. Question 74. The country-of-origin effect refers to _____. governed by a contract that provides the focal firm with moderate level of control over the foreign partner 2. They typically include the exchange of intangibles and services. 1. On the other hand, franchising is a business model whereby a company (franchisor) allows another company (franchisee) to use its. 2. International Business: The New Realities, 5e, Global Edition (Cavusgil) Chapter 15 Licensing, Franchising, and Other Contractual Strategies. Product Adaption. Contracts. licensing is the limitation placed on licensing agreements. Licensing ii. Verified Answer for the question: [Solved] The reputation of a licensor will be jeopardized by a licensing agreement if the licensee _____. Franchisee: A franchisee is a small business owner that purchases the right to use an existing business's trademarks, associated brands, and other proprietary knowledge. Test. It’s crucial to understand the key differences and similarities between these two popular growth strategies. When the parties make licensing or franchising agreement, the parties should critically.