docx from INT- 113 at Southern New Hampshire University. This part concerns the sale of knowledge rather than the sale of goods—licensing, franchising, management contracts and other similar arrangements. Chapter 15: Licensing, Franchising, and Other Contractual Strategies Key Elements Contractual Entry strategies in. 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. 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. Licensing is a contractual arrangement where a company grants permission to another party to use its intellectual property or brand. The problems facing franchise companies in international transactions are relatively less formidable than those facing other service sectors. trading bloc c. According to Franchise Business Review, franchising fees typically range from $25,000-$50,000 on average. Some companies use direct exporting, in which they sell the product they manufacture in international markets without third-party. Strategy 3: Franchising. The impact of strategy considerations can most easily be illustrated in a Cournot duopoly setting as displayed in Fig. Licensing is a legal process in which one firm pays to use or distribute another firm's resources. Franchising is common in manufacturing industries while licensing is primarily used in service industries. Study with Quizlet and memorize flashcards containing terms like Inbound licenses, Outbound licensing, Contractual entry strategies in international business and more. 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. It reduces risks for both parties. C) There is no scope to operate an independent. contractual agreements. WEEK 12 - LICENSING, FRANCHISING AND OTHER CONTRACTUAL STRATEGIES. arrangement in which the focal firm or a consortium of firms plans, finance, organizes, manages. Focal firm has moderate level of control over the foreign partner. Terms in this set (22) contractual entry strategies in international business. External: Operating Enviornment. _____ these are the items owned by a franchisee that has the same monetary value. View MIB_8_MSLewandowska_2018_Fra. They provide dynamic, flexible choice. Learn. IBUS CH 15 Licensing, Franchising, and Other Contractual Strategies. Essentially, you need to decide whether you want to buy a franchise or own your own business while pursuing licensing opportunities. economic output and, depending on your needs, goals and circumstances, may be the right choice for you. Test. If you want to have more autonomy in business decisions with the freedom to make your own vision come to life. docx from BUS 417 at Zayed University. Angelica Weiss Chapter 16: Licensing, Franchising, and Other Contractual Strategies Contractual entry strategies in international business: 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. Why would a company choose to use a contractual mode of entry rather than an investment mode? Contractual forms of entry (i. Subscribe to newsletters Subscribe: $29. 4 Understand franchising as an entry strategy. Zhao et al. A) markets competing products for significantly lower prices B) uses the licensing asset to create products of poor quality C) refuses to pay the agreed upon royalties to the licensor D) does not guarantee future expansion in the. Licensing, Franchising, and Other Contractual Strategies 438 Part 5 Functional Area Excellence 464 16. Entering. intellectual property. Multiple Choice . International Business: The New Realities, 5e (Cavusgil) Chapter 15 Licensing, Franchising, and Other Contractual Strategies 1) A _____ 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. , Licensing. Terms in this set (19) Contractual entry strategies. It's also easier for the company to extricate itself from the situation if the results aren't favorable. proficient interviews, and industry leading guides that cover everything from franchising basics to advanced franchise growth strategies. In this chapter, we address various types of cross-border contractual relationships, including licensing and franchising. Exporting. Some firms view licensing as a supplementary strategy to other entry strategies, such as exporting or FDI. , T/F Organizations as diverse as Disney, Caterpillar,. 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. Learn. , Contractual alliances include all of the following except: a. Global Strategy and Organization; 12. As compared to other retailers, it is safe to say that IKEA has a unique organisational. 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". Browse With TopicA licensing agreement is a contract between two parties (the licensor and licensee) in which the licensor grants the licensee the right to use the brand name, trademark, patented technology, or ability to produce and sell goods owned by the licensor. Compromises between short-term transactions and long-term solutions. 25 “Market entry options”). Licensing concerns a product rights or the method of production marketing the product rights. 15. Brand licensing is the act of giving permission to another company to use your business’s intellectual property (IP). , Licensing Agreement, Copyright Licensing and more. distributing or retailing products that are traditionally manufactured by the franchisor. When a firm allows others to use an entire business system in exchange for compensation, the arrangement is known as ________. Franchising. A franchise is a business model in which a business owner licenses their business to another individual or organization. Licensing, Franchising, and Other Contractual Strategies. Patents provide inventors the right to prevent another person or company from selling or using an invention for up. Licensees also enjoy lowered risk because they're usually entering the marketplace with a known quantity and a built-in customer base. Chapter 16 Licensing, Franchising, and Other Contractual Strategies Learning Objectives: 1. 2 Understand licensing as an entry strategy. 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. Change Product. Flashcards. Internal: Strategic. True. Type of Entry. • Contractual entry strategies (franchising, licensing, management. licensing, Strategic alliancesA detailed list of issues pertaining to termination and renewal terms The advantages and disadvantages of franchising are similar to those of licensing. and industry experts about instructions to franchise your business. 6. an advanced form of licensing in which the firm allows another the right to use an entire business system in exchange for fees, royalties, or other forms of compensation. Licensing 4. Licensing as an Entry Strategy a. Quiz 15: Licensing, Franchising, and Other Contractual Strategies. cross-border contractual relationships share several common characteristics. ENTERING AND OPERATING IN INTERNATIONAL MARKETS; 13. an advanced form of licensing in which the firm allows another the right to use an entire business system in exchange for fees, royalties, or other forms of compensation. 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. 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. Study Resources. Either way, the licensor gets a kickback—as a. Flashcards. in exchange for royalties, license fees, or some other form of compensation Patent Trade secret Brand name Product formulations. 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. Table 7. Licensing vs Franchising The primary difference between a franchisee and a licensee is that franchisees can expect to have a much closer. b. Studying is made a lot easier and more fun with our online flashcards. 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. Arrangement in which an independent company is licensed to establish, develop, and manage the entire franchising network in its market and has the right to sub franchise to other franchisees, assuming the role of local franchisor. Verified Answer for the question: [Solved] _____ is the world's leading licensing firm, with $56. 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. Licensing and franchising. The most common methods firms join international trade are through contractual entry strategies such as direct exporting, franchising, licensing, management contract, contract manufacturing, buying a company, and joint ventures. Default and termination 3. Cross-border exchanges in which the relationships between the focal firm and its foreign partner is governed by an explicit contract. Flashcards. Key Challenges Faced by the Franchisee is the Decreased Likelihood. • Understand licensing as an entry strategy. Posted by Rully Mangunsong at 10:16 AM. A. Ideas or works created by firms or individuals, such asintellectual property grants another firm the right to usethat property for a specified period of time in exchangeView Homework Help - Week 12. 15 Licensing, Franchising and Other Contractual Strategies. Intellectual property describes. 11 “Market Entry Options”). An organisation will need to determine their desired level of commitment, flexibility, control, presence and risk when going global, in order to choose the entry mode which best suits their situation. Royalties. Direct exporting allows consumers or businesses in new markets to easily buy your products wholesale, where you handle the shipping. Cavusgil, 3edition, Licensing Franchising and Other Contractual Strategies, Licensing, Franchising, Franchise, Chapter16. 2. Which mode is to be used in which situation 5. 6 billion in revenues. Flashcards. D. actively manage a foreign. Often regarded as second best to export or direct investment. 15. Match. Get Quality Help. The Franchiser maintains significant control of, or provides significant assistance to, the franchisee’s operation methods. cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an explicit. Foreign. To sum up, there are various methods that a firm can utilize in its foreign market entry market strategy. Establishing joint ventures with a host-country firm 6. Licensing of IPRs is at the heart of a franchise contract. at completion of the contract, the foreign client is handed the "key. c. a. Governed by a contract that provides the focal firm with a moderate level of control over the foreign partner. 1 Advantages and Disadvantages of Di erent Modes of Internationalization. Email This BlogThis! Share to Twitter Share to Facebook Share to Pinterest. 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 other compensation. Revenues are usually more modest than with other entry strategies. 25 “Market entry options”). Ch. pdf from BUST 08009 at University of Edinburgh. Chapter 15 Licensing, Franchising and other Contractual Strategies Internatonal Business:Contractual entry strategies in international business. Advantages. Study with Quizlet and memorize flashcards containing terms like In the context of international trade restrictions, offering less-favorable exchange rates to certain importers is a(n) _____. Learn. Contractual Entry Strategies. doc from ADMN 05 at The Islamic University of Gaza. Match. When the executives in charge of a firm decide to enter a new country, they must decide how to enter the country. 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. Ask AI New. Franchise: A franchise is a type of license that a party (franchisee) acquires to allow them to have access to a business's (the franchiser) proprietary knowledge, processes, and trademarks in. When considering a venture in international markets, there are some significant tactical and strategic decisions to be effected. Licensing. thecashchicken. The five most common methods include exporting, licensing and franchising, partnering and strategic alliance, acquisition, and Greenfield venture. License 101 Where lives Entering?. Question 14. While extant research revolves around the level of resource commitment and control in foreign activities, non-traditional. Franchising makes up 10% of the U. Terms in this set (7)Study with Quizlet and memorize flashcards containing terms like when it comes to getting involved in international business what are the three strategies that require the least amount of commitment and effort?, export assistance centers provide hands-on expiring assistance and trade-finance support for ____ and _____ -sized businesses. Contractual Entry Strategies Contractual entry strategies Two common types of contractual entry strategies are licensing andLicensing. d. C) They attract less attention and less of the criticism sometimes directed at firms. Homework Help. True/False . 15. 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. Because first mover advantage has been shown to result in better performance in emerging markets Marinov and Marinova 1999, Luo and Peng 1998, a firm may chose licensing as an expeditious entry strategy to gain the first mover advantage and create barriers for subsequent entrants. Protecting Intellectual Property. 3. ( True/False ) Question 1Start studying Ch 16: Licensing, Franchising, and other Contractual Strategies. 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. and win! Microsoft Volume. 15. Licensing, Franchising, and Other Contractual Arrangements Michael Z. 11). Either way, the licensor gets a kickback—as a. the advantages of franchising as an entry mode to global expansion are similar to the disadvantages of licensing false the least preferred strategy when a company's competitive advantage is based on technology is the wholly owned subsidiaryChapter 6: Strategic Alliances. Contractual entry strategies in int’l business – cross border exchanges where the. Flashcards. caitlyn_stryker. Joint R&D iv. Contract usually runs five to seven years and is renewable at option of parties. Multiple Choice . Licensing, Franchising and. g. - Arrangement where owner of intellectual property grants another firm right to use property for specific time in exchange for royalties or other compensation. Some of these market entry strategies include exporting, licensing, franchising, partnering, joint ventures, turnkey projects, and greenfield investments. a. Management Contract 4. Methods for General Eintrittspreis into the Total Marketplace. Licensees can re-sell the IP at a higher price or manufacture merchandise with the IP on it. Question 2. Learn. e. Let’s take a look. 1. Correct Answer: Access For Free . foreign direct investment. Licensing gives a company greater control than franchising over the sale of its product in a target market. B) They are more susceptible to volatility and risk compared to FDI. accepting a business model for doing a business in a traditional manner. Created by. Patent. Learn. Patent licensing is one of the most expensive licensing. The Franchiser requires the franchisee to make a minimum payment of $500 or more, and. Learn. 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 other compensation. • 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. It is unusual to see a direct comparison between, say, licensing and joint ventures, or between franchising and subcontracting. Exporting and Foreign Direct Investing are Two Common Types of Contractual. It is quite similar to the "franchise" operation. In franchising, the franchisor licenses the. Several companies get patent their technology and other products that they don’t want anyone else to use without their consent. 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. Study with Quizlet and memorize flashcards containing terms like 5 Methods for entering the global market place from least risky/return to most risky/return, Exporting, Licensing and Franchising and more. d. Which of the following is provided by the licensor in a licensing agreement? A) a monetary down-payment plus royalties for all products sold. The license has much stricter restrictions than the franchise. 3Describe the advantages and disadvantages of licensing. Human Resource Management. Flashcards. It is where a person (franchisor) who has developed a certain way of doing a business gives another. The International Franchise Association defines franchising as a "continuing relationship in which the franchisor provides a licensed privilege to do business, plus assistance in organizing training, merchandising and management in return for a consideration from the franchisee ". Subway is a company that has spread worldwide through its expansion strategy. 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. and popular strategies for business expansion. 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. Pages 6. Payment is made only after you have completed your 1-on-1 session and are satisfied with your session. On the other hand, international licensing is a foreign market entry mode that presents some. Log in Join. Match. Strategic alliances can take many different forms, such as joint ventures, licensing agreements, and marketing alliances. pdf from ECON 102 at Warsaw School of Economics. BUS. 4. Licensing is governed by a licensing agreement, which involves a one-time transfer of property or rights for a fee. 2 Exporting 7. Verified Answer for the question: [Solved] The reputation of a licensor will be jeopardized by a licensing agreement if the licensee _____. Build trust, build interpersonal relationships, get to know each other, build an informal network between the 2 firms managers. When it comes to retail entrepreneurship, there are several ways to open a. Contractual entry strategies in international business Click the card to flip 👆 cross-border exchanges in which relationship between the focal firm and its foreign partner is governed by an explicit contract Licensing, Franchising and other Contractual Strategies International Business Strategy, Management. 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. chesiebels. Ch. Terms in this set (21) Contractual entry strategies in international business. Solved . Choose from 29 different sets of Licensing, Franchising and other contractual strategies flashcards on Quizlet. Licensing, Franchising and other contractual strategies. b. Switching costs: A. [afm 333 – chapter 16 li censing, franchising, and o ther contra ctu al stra tegie s] 1 Contr actual entry s tr ateg ies in int ernational business: cr oss-border e x changes wher e the re lationship between t he foc al firm and its f oreign partner is g overn ed by an explicit co ntr act 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 singular activity such as the shared use of a trademark. Typically include the exchange of intangibles and services. CHAPTER 15 LICENSING FRANCHISING AND. 1. Franchising VS Licensing. , patents, trademarks, copyrights) in exchange for a fee or royalty payment. Docsity. 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. make it difficult for later entrants to win business. . Chapter 16- Licensing, Franchising, and Other Contractual Strategies Flashcards | Quizlet Chapter 16- Licensing, Franchising, and Other Contractual Strategies 5. Find Flashcards. 3. 1 International-Expansion Entry Modes. Turnkey projects 3. 15 ~ Licensing, Franchising, and Other Contractual Strategies. If you want to have more autonomy in business decisions with the freedom to make your own vision. The legal claim through which the proprietary assets of firms and individuals are protected from unauthorized use by other parties. Disadvantages of licensing. Exporting and foreign direct investing are two common types of contractual entry strategies. Microfranchises: Franchises operated by one or two people. when the franchisor has been successful domestically because of unique products and advantageous operating procedures and systems. C) cross licensing. Mode Characteristics Advantages Disadvantages. U. 1Explain contractual entry strategies. 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. There are five basic options available: (1) exporting, (2) creating a wholly owned subsidiary, (3) franchising, (4) licensing, and (5) creating a joint venture or strategic alliance (Table 7. 15. External: Operating Enviornment. 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. arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified. - Firms that use licensing often can avoid expensive entry as is usually required in FDI. Study with Quizlet and memorize flashcards containing terms like Contractual entry strategies in international business, Intellectual property, Licensing and more. Study Licensing, franchising and other contractual strategies (Key Terms) flashcards from Lewis Mellor's class online, or in Brainscape's iPhone or Android app. Study with Quizlet and memorize flashcards containing terms like Contractual entry strategies in international business, Intellectual property, Licensing and more. Beyond importing, international expansion is achieved through exporting, licensing arrangements, partnering and strategic alliances An international entry mode involving a contractual agreement between two. In some cases, it’s either for five years or can be for 20 years. Study with Quizlet and memorize flashcards containing terms like contractual entry strategies in international business, intellectual property, intellectual property rights and more. The license agreement permits the use of trademarks, nothing more. Licensing typically involves royalties or. Test. When considering entering international markets, there are some significant strategic and tactical decisions to be made. Technically, the contract binding. they typically include the exchange of intangibles and services 3. 15. Ask AI New. Many firms build biotech tags,. FDI in particular is now carried out not only by traditional MNEs but also by private investors, hedge funds, SOEs and even sovereign wealth funds. Firms can pursue them independently or in conjunction with other entry strategies. Franchising is another variation of licensing strategy. A license allows the licensee to use, make and sell an idea, design, name, or logo for a fee. 2. 2. There are five basic options available: (1) exporting, (2) creating a wholly owned subsidiary, (3) franchising, (4) licensing, and (5) creating a joint venture or strategic alliance (Figure 7. embargo, In the context of various strategies for reaching global markets, which of the following strategies. Study with Quizlet and memorize flashcards containing terms like Inbound licenses, Outbound licensing, Contractual entry strategies in international business and more. Cost of Licensing vs. , licensing and franchising) have lower up-front costs than investment modes do. Two Types of Contractual Relationships. Accounting for 12% to 13% of British trade, these methods of earning money abroad have become more popular in recent years. Brand licensing is the act of giving permission to another company to use your business’s intellectual property (IP). Contract manufacturing iv. Cooperative strategies refer to any type of agreement between two or more firms, contractual or otherwise, involving mutual forbearance towards one or more (typically not identical) goals by providing capital, knowledge, technology, managerial talent, and/or other valuable assets under the purview of said firms (Anand & Khanna, 2000; Gulati, 1998). wholly owned subsidiaries. 15. The difference is that the franchiser provides a bundle of services and products to. Contracts. licensing. Disadvantages. Markman et al. Created by. includes exchange of intangibles and services 3. Similarly, explicit contracts define franchising relationships. Chapter 15: Licensing, Franchising, and Other Contractual Strategies Key Elements Contractual Entry strategies in 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. Strategic Management Chapter 7. agreement, the multinational firm grants rights on its intangible property, like technology or a brand name, to a. Licensing involves granting rights to use intellectual property, while franchising grants rights to use an entire business model. Study with Quizlet and memorize flashcards containing terms like Contractual entry strategies in international business, intellectual property, intellectual property rights and more. b. View chapter 15. 1 Licensing. The main difference between the two is the duration of the commitment involved. nontariff barrier d. Franchising 5. B) It ensures payment from the licensee to the licensor upon receipt of an export shipment. View Homework Help - Week 4 - Subway Case. Learn faster with spaced repetition. , Licensing is a contractual agreement whereby one company (the licensor) makes a legally protected asset available to another company (the licensee) in. OTHER CONTRACTUAL ENTRY STRATEGIES -Under build-operate-transfer (BOT) arrangements, the firm contracts to build a major facility, such as a power plant, which it operates for a period of years and then transfers to the host-country government or other public entity. Key challenges faced by the franchisee is the decreased likelihood of operating an independent business. View Test Prep - licensing and franchising from ECONOMICS 12 at Xavier Institute Of Management & Research. Direct strategies include joint ventures and wholly-owned subsidiaries/ greenfield investments (see Table 2). 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. When a business enters a foreign market after other foreign firms, the situation is defined as ______ entry. Study with Quizlet and memorize flashcards containing terms like Build-operate-transfer (BOT), contractual entry strategies in international business, Intellectual Property and more. Aspect Franchising Licensing; Definition: Franchising is a business model where a franchisor grants a franchisee the right to operate a business using the franchisor’s brand, systems, and support in exchange for fees and royalties. Major global. But the Mouse’s actual 2023 number. Ch 16: Licensing, Franchising, and other Contractual Strategies. 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. 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. View Overview. Test. Licensing: Licensing is defined as "the method of foreign operation whereby a firm in one country agrees to permit a company in another country to use the manufacturing, processing, trademark, know-how or some other skill provided by the licensor". Learn the differences between licensing and franchising and why licensing is not an optional to franchising. 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. 47 I Use contemporary technology to minimize counterfeiting.