, patents, trademarks, copyrights) in exchange for a fee or royalty payment. Either way, the licensor gets a kickback—as a. C) They attract less attention and less of the criticism sometimes directed at firms. Franchising iii. 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. Royalties. Build trust, build interpersonal relationships, get to know each other, build an informal network between the 2 firms managers. Learn. Many Indian firms can use licensing or franchising of the overseas market, particularly the developing countries. other contractual agreements and equity modes (wholly owned subsidiary or joint venture). Franchisers must comply with the same local requirements as other businesses, and the franchise agreements must comply with local contract law, antitrust law, and trademark and licensing laws. B)It is an ownership-based international business activity. 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. Match. *Granting a right to use property to others. View Test Prep - licensing and franchising from ECONOMICS 12 at Xavier Institute Of Management & Research. International Business: The New Realities, 5e, Global Edition (Cavusgil) Chapter 15 Licensing, Franchising, and Other Contractual Strategies. Licensing •A contractual agreement whereby one company (the licensor) makes an asset. It described the development of Chinese hotel industry at the end. In turnkey contracting, one or several firms plan, finance, organize, and. 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. cross-border contractual relationships share several common characteristics. What Are The Types of International Business. Test. Staffing leverage . 1 International-Expansion Entry Modes. 16 Licensing, Franchising, and Other Contractual Strategies. In franchise, a franchiser sells a property to the franchisee but controls over the procedures of the business. In addition to the standard license process, a company will assist in establishing the business with the design, equipment, organization, and marketing. make it easy for later entrants to win business. Franchising. Test. Licensing, Franchising, and Other. b. 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. The five most common methods include exporting, licensing and franchising, partnering and strategic alliance, acquisition, and Greenfield venture. Subscribe to newsletters Subscribe: $29. Franchising. develop, and manage the entire franchising network in its market and has the right to subfranchise to other franchisees, assuming the role of local franchisor. Contractual entry strategies 2. Exporting entails selling products to foreign customers. Question 4. Test. View Any. 1. equity mode of entry into foreign markets limited to a contractual agreement. 3. This part concerns the sale of knowledge rather than the sale of goods—licensing, franchising, management contracts and other similar arrangements. real business leading guides that top everything from franchises basics to advanced vote growth strategies. Some firms view licensing as a supplementary strategy to other entry strategies, such as exporting or FDI. B) They are more susceptible to volatility and risk compared to FDI. 1 International Entry Modes 7. Chapter 16 – Licensing, Franchising, and Other Contractual Strategies I. destineeashlee. contractor supplies managerial know how. ENTERING AND OPERATING IN INTERNATIONAL MARKETS; 13. - As entry strategy, licensing requires neither substantial capital investment nor extensive involvement of licensor in foreign markets. Licensing is a legal process in which one firm pays to use or distribute another firm's resources. Accounting for 12% to 13% of British trade, these methods of earning money abroad have become more popular in recent years. Licensing is a contractual agreement whereby one company (the licensor) makes a legally protected asset available to another company (the licensee) in exchange for royalties, license fees, or some other form of compensation. 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. C) A local firm allows the focal firm to blend into the local market, attracting less. by Cavusgil, Knight & Riesenberger. Several strategies for franchising in East. 1. 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. 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. View chapter 15. In Licensing agreement and franchise, an overseas-based business will pay you a royalty or commission to use your. the firm enters a foreign market before other foreign firms - this is a proactive strategy. 2. to a foreign partner in exchange for a continuous the firm allows another the right to use an specific products, as well as the rights to distribute. 4 ways to enter foreign markets. External: Operating Enviornment. 1 Explain contractual entry strategies. View Overview. Learn faster. 7. Process. Franchising. 4 illustrates the nature of the franchising agreement A typical. D) strategic decision making. Table 7. Firstly, licensors can generate additional revenue streams by granting licenses to third parties, enabling them to enter new markets or expand their product offerings without significant investment. Chapter 16 Licensing, Franchising, and Other Contractual Strategies Learning Objectives: 1. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Internal: Operational. licensing. Created by. (2004) differ between ownership-bas ed entry modes (OBEs) and contract based modes (CBMs). 2Understand licensing as an entry strategy. • 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. The globalization of franchising took off in the 1990s as a result of push factors (domestic. These options vary in terms of how much. BUS MISC. Learn the distinguishing between licensing and franchising and why licensing is not certain alternative on franchising. Business model: The first difference is in the business model. 15. Focal firm has moderate level of control over the foreign partner. 2. 99/yearQuiz 15: Licensing, Franchising, and Other Contractual Strategies. licensing team. One of the key differences between a franchise and a license is the limitation set out in licensing agreements. 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. Learn. The non-equity modes category includes export and contractual agreements. It is unusual to see a direct comparison between, say, licensing and joint ventures, or between franchising and subcontracting. docx from BUS 417 at Zayed University. b. ( Multiple Choice) Question 2. Licensing offers more controlBy expanding into new territories and regions via franchising, your company’s services are made available to a wider audience, both diversifying and localizing your reach. cavusgil ib im 15 - CHAPTER 15 LICENSING FRANCHISING AND OTHER CONTRACTUAL STRATEGIES DETAILED CHAPTER OUTLINE INTRODUCTION The opening vignette is. Test. Revenues are usually more modest than with other entry strategies. In a very real sense, a licensor and licensee are entering into “a partnership for living well”, ie, the licence willVerified Answer for the question: [Solved] Which of the following is an example of licensing? A) Saks Inc. True/False . -the amount of equity required affects the risk,return, and control that it will have in. Governed by a contract that provides the focal firm with a moderate level of control over the foreign partner. Two Types of 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 other compensation • Franchising: An arrangement in which the firm allows another the right to use an entire business system in exchange for fees, royalties, or other. Multiple Choice . 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. Direct exporters often sell directly to a consumer (B2C), a business (B2B), or a distributor in a foreign country. . In franchising, decision rights encompass the assignment of rights for use of system- and outlet-specific assets in contracts. Protecting Intellectual Property. ( Multiple Choice) Question 2. 5 Explain the advantages and disadvantages of franchising. Turnkey projects 3. accepting a franchise for dealing with the traditional products. They are governed by a contract that provides the focal firm a moderate level of control over the foreign partner. Franchising, on the other hand, is a business expansion model where a franchisor grants the rights. 1-1 BUS 434 Market Entry Licensing, Franchising, and Other Contractual Strategies 1-2 Contractual Relationships • 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. Representatives of the Azoo government are reviewing the project bids. My Library. Stage Three: Specify a specific format that is either equity based or contractual (nonequity based). They provide dynamic flexible choice View LICENSING from BUSINESS A M0804455 at Ain Shams University. Franchising is governed under the Franchise Act 1998 (“the Act”) and is regulated by the Registrar of Franchises (“Registrar”) under the purview of Ministry of Domestic Trade and Consumer Affairs. There are six basic options available: (1) exporting, (2) licensing, (3) franchising, (4) creating a joint venture or strategic alliance (5) acquisition/creating a wholly owned subsidiary, and (6) greenfield/wholly owned subsidiary (Table 9. The license agreement permits the use of trademarks, nothing more. 1 Explain 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. View Test Prep - licensing and franchising from ECONOMICS 12 at Xavier Institute Of Management & Research. Licensing, Franchising and other Contractual Strategies. Each entry mode has different pros and cons, addressing issues like cost, control, speed to market, legal barriers, and cultural barriers with different degrees of efficiency. Study with Quizlet and memorize flashcards containing terms like T/F Licensing is a contractual agreement whereby one company (the licensor) makes a legally protected asset available to another company (the licensee) in exchange for royalties, license fees, or some other form of compensation. Type of Entry. Global Marketing Strategy for. a. ) Finding financing for a new business in other countries. b. There are two major types of market entry modes: equity and non-equity. Licensing. A licensing agreement is generally less complicated and easier to finalize than a franchise agreement. Internal: Strategic. Chapter 15 Licensing, Franchising and other Contractual Strategies Internatonal Business: Other mark ups and contributions like finance charges, sale of related products etc. 15 Licensing, Franchising and Other Contractual Strategies. Study with Quizlet and memorize flashcards containing terms like Contractual Entry Strategies in International Business, Intellectual Property, Intellectual Property Rights and more. Chapter 16 - Licensing, Franchising and other Contractual Strategies. 99/year Quiz 15: Licensing, Franchising, and Other Contractual Strategies. School Anadolu University; Course Title BUS 1332; Type. A) Duty B) Residual C) Royalty D) Tariff Answer: CLicensing 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. An Industrial Design is Intended to _____ Question 2. and popular strategies for business expansion. 1. Franchising is common in manufacturing industries while licensing is primarily used in service industries. On the other hand, franchise agreements allow the use of trademarks, additional intellectual. A number of foreign market entry modes exist, including: exporting, licensing, franchising, joint venture and wholly owned subsidiary. 4. Licensing of IPRs is at the heart of a franchise contract. Study with Quizlet and memorize flashcards containing terms like contractual entry strategies in international business, intellectual property, intellectual property rights and more. 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. agreement, the multinational firm grants rights on its intangible property, like technology or a brand name, to a. 3 Describe the advantages and disadvantages of licensing. Learn. Brand owners lease their patents, software, or characters to other companies. Protecting Intellectual Property. 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. View Chapter 16. Flashcards. they are governed by a contract that provides the focal firm with a moderate level of control over the foreign partner 2. 1 Advantages and Disadvantages of Di erent Modes of Internationalization. A licensing agreement is generally less complicated and easier to finalize than a franchise agreement. Coca Cola is an excellent example of licensing. Contract manufacturing is also called outsourcing. Licensees can re-sell the IP at a higher price or manufacture merchandise with the IP on it. arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified. Licensing and franchising share a few similar advantages. CONTRACTUAL ENTRY STRATEGIES Two common types of contractual entry strategies are licensing and franchising. cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an explicit. Flashcards. Match. Franchising allows franchisors to function effectively with a much leaner organization. Ctrl+k Search questions by imageRetail franchising is the method of opening a single store under the umbrella of an established name, branding, trademark, and product line. Franchising only deals with the provision of a service, while licensing can be for both services and products. Homework Help. Focal firm has moderate level of control over the foreign partner. e. ,. Licensing, Franchising and Other Contractual Entry Strategies - Chapter 15. The Franchiser requires the franchisee to make a minimum payment of $500 or more, and. The legal claim through which the proprietary assets of firms and individuals are protected from unauthorized use by other parties. Franchising. world markets • Starbucks has used direct ownership, licensing, and franchising for shops and products In 2008, Starbucks had 12,000 cafes in 35 countries and sales of $10. Licensees also enjoy lowered risk because they're usually entering the marketplace with a known quantity and a built-in customer base. University High School High School Regions. Match. a. cross-border exchanges in which relationship between the focal firm and its. Dispute settlement 4. Strategic alliances can take many different forms, such as joint ventures, licensing agreements, and marketing alliances. Contracts. Typically include the exchange of intangibles and services. Some of these market entry strategies include exporting, licensing, franchising, partnering, joint ventures, turnkey projects, and greenfield investments. 3 Describe the advantages and disadvantages of licensing. Less control, licensee may become a competitor, legal and regulatory environment (IP and contract law) must be sound: Partnering and Strategic Alliance: Shared costs reduce investment needed, reduced risk, seen as local entity: Higher cost than exporting, licensing, or franchising; integration problems between two corporate. Cavusgil, 3edition, Licensing Franchising and Other Contractual Strategies, Licensing, Franchising, Franchise, Chapter16. Two Types of Contractual Relationships. in exchange for royalties, license fees, or some other form of compensation Patent Trade secret Brand name Product formulations. fAdvantages & Disadvantages of. Franchising is a variation of licensing strategy in which there is a contract between the parent company franchiser and. when the factors that contributed to domestic success are transferable to foreign locations. 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. give later entrants a cost advantage over early entrants. Licensing, Franchising and other contractual strategies. 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. Contract duration and renewal 2. By entering your email, you agree to receive marketing emails from Shopify. When a business enters a foreign market after other foreign firms, the situation is defined as ______ entry. e. Why would a company choose to use a contractual mode of entry rather than an investment mode? Contractual forms of entry (i. Licensing concerns a product rights or the method of production marketing the product rights. 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. Patents provide inventors the right to prevent another person or company from selling or using an invention for up. Verified Answer for the question: [Solved] In a licensing agreement, ________ is responsible for local sales. Typically include the exchange of intangibles and services. View MIB_8_MSLewandowska_2018_Fra. D) franchise contract involves less control and. a. 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. With franchising, a foreign company essentially sets up a replica of the franchiser’s business, paying royalties and other fees to use its intellectual property, brand, and business model. 3. According to Franchise Business Review, franchising fees typically range from $25,000-$50,000 on average. 1 Licensing. 6. Match. Email This BlogThis! Share to Twitter Share to Facebook Share to Pinterest. Disadvantages. Devaluation decreases the value of currency in relation to other currencies. View Homework Help - Week 4 - Subway Case. when the franchisor has been successful domestically because of unique products and advantageous operating procedures and systems. They generate a consistent, stable level of earnings from foreign operations. Learn faster with spaced repetition. 3. Firms need to evaluate their options to choose the entry mode that best suits their strategy and goals. About Press Copyright Contact us Creators Advertise Developers Terms Privacy Policy & Safety How YouTube works Test new features NFL Sunday Ticket Press Copyright. Test. Subscribe to newsletters Subscribe: $29. 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. The organization that gives the access is the licensor. B) An Indian automobile manufacturing company, buys engines from a Japanese manufacturer for its. IB Final review 80% A- / 90% A Chapter 16 Licensing, Franchising, and Other Contractual Strategies o Intellectual Property (IP): refers to ideas or works created by individuals or firms, including discoveries and inventions; artistic, musical, and literary works, and words, phrases, symbols, and designs Creation from the mind Licensing licenses. strategic alliances. Markman et al. licensing is the limitation placed on licensing agreements. When considering entering international markets, there are some significant strategic and tactical decisions to be made. Brand licensing is the act of giving permission to another company to use your business’s intellectual property (IP). In deciding which method to adopt, it is important that a firm evaluate each entry mode’s. Strategy 3: Franchising. 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. Your matched tutor provides personalized help according to your question details. - Firms that use licensing often can avoid expensive entry as is usually required in FDI. caitlyn_stryker. Contractual Entry Modes 3. Flashcards. 6 billion in revenues. Meaning. Mode Characteristics Advantages Disadvantages. 1. A) duty B). Global Strategy and Organization; 12. 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. accepting a business model for doing a business in a traditional manner. Another popular way to expand overseas is to sell franchises. A strategic alliance is a collaborative agreement between two or more companies to pursue mutually beneficial objectives. Strategy and Organization in the International Firm 316 12. Licensing, on the other hand, is a form of private contract between parties and. b. The Franchiser requires the franchisee to make a minimum payment of $500 or more, and. 1 International-Expansion Entry Modes. and industry experts about instructions to franchise your business. On the other hand, franchise agreements allow the use of trademarks, additional intellectual. 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. Voluntary agreements between firms. Two Types of 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 other compensation • Franchising: An arrangement in which the firm allows another the right to use an entire business system. In licensing/franchising, the organization sells the rights to intellectual property to an entity within a foreign market for a royalty fee. Two common types of contractual entry strategies are licensing and franchising. The difference is that the franchiser provides a bundle of services and products to. Franchisor may impose inappropriate technical or managerial systems on the franchisee. Patent licensing is a licensing that a licensor gives to the licensee to grant permission to conduct patent activities. 15. Licensing,. 4. Licensing and Franchising. 2 Franchising as an expansion strategy. Study with Quizlet and memorize flashcards containing terms like contractual entry strategies in international business, intellectual property, intellectual property rights and more. In some cases, it’s either for five years or can be for 20 years. True. As compared to other retailers, it is safe to say that IKEA has a unique organisational. cross-border exchanges in which relationship between focal firm and foreign partner is governed by explicit contract. Licensing: Licensing offers several benefits for both the licensor and the licensee. 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. d. It's also easier for the company to extricate itself from the situation if the results aren't favorable. Franchising: more complex form of licensing in which the franchisor allows a franchisee the right to use its entire business system in exchange for compensation. 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 ". cross border interaction between focal firm and foreign firm governed by a contract. Flashcards. Licensing as an Entry Strategy a. It is a form of distribution and marketing in which the company gives the other firm the right to do business in their protected way (Bradley 2005:246). Governed by : Contract law governs licensing. Technically, the contract binding. Contractual Entry Strategies. When considering a venture in international markets, there are some significant tactical and strategic decisions to be effected. One of the major differences when it comes to franchising vs. 3. Study with Quizlet and memorize flashcards containing terms like 1) For Starbucks and other companies whose business models include a service component, it is not recommended that they use one of the following methods for going global. The problems facing franchise companies in international transactions are relatively less formidable than those facing other service sectors. True Franchising is a variation of licensing strategy in which there is a contract between the parent company franchiser and a franchisee that allows the franchisee to operate a business developed by the franchiser in return for all rights for operations. Cost of Licensing vs. Chapter 15: Licensing, Franchising, and Other Contractual Strategies Key Elements Contractual Entry strategies in. . 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". Franchising VS Licensing. These options vary in terms of how. For example, a restaurant or a salon can be franchised, but not the products they use to provide the said services. Learn. Exporting falls within the broad umbrella of market entry strategies that include a range of approaches to build international markets for your business. includes exchange of intangibles and services 3. 2. 15 ~ Licensing, Franchising, and Other Contractual Strategies. The Franchiser maintains significant control of, or provides significant assistance to, the franchisee’s operation methods. In the franchising packages trademarks, copyright, patents and other things often are included. 1. 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. Process. Licensing gives a company greater control than franchising over the sale of its product in a target market. 15. Licensing and franchising. Our clients are winning for franchising. pdf from BUST 08009 at University of Edinburgh. a. Other Contractual Entry Strategies Chapter 15 Contractual Entry Strategies There are two common types of contractual entry strategies; 1. Several companies get patent their technology and other products that they don’t want anyone else to use without their consent. Bashar Hassan. B) The franchisor holds much power, including superior bargaining power. -most often begun with export. licensing, don’t forget that they are separate concepts and each of them offers promising prospects. 25 “Market entry options”). Contractual Entry Strategies Contractual entry strategies Two common types of contractual entry strategies are licensing andLicensing. 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. An Introduction A. Firms can pursue them independently or in conjunction with other entry strategies. Study with Quizlet and memorize flashcards containing terms like Inbound licenses, Outbound licensing, Contractual entry strategies in international business and more. a. Created by. 15- Licensing, Franchising and other. Licensing typically involves royalties or. In other words, a licensing agreement grants the licensee the ability to use intellectual. A) advanced economies B) economies with high PPP C) First World countriesthe statutory protections of franchise laws even if it wants to on advice of legal counsel. Change Product. Create flashcards for FREE and quiz yourself with an interactive flipper. Get Quality Help. marijaazz. Exporting involves marketing the products you produce in the countries in which you intend to sell them. A. Describes the appearance or features of a product. drive early entrants out of the market. Brand owners lease their patents, software, or characters to other companies. The licensee/franchisee gets immediate brand recognition and may quickly overtake the competition by offering a product or service for which there is existing unmet demand. Flashcards. It’s crucial to understand the key differences and similarities between these two popular growth strategies. Some companies use direct exporting, in which they sell the product they manufacture in international markets without third-party. Created by. 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 ________. Franchising suggests the use of a whole package of signature products and business solutions, whereas licensing allows entrepreneurs to leverage certain individual property and produce and.