Question 1

Which of the following is characteristic of master franchise arrangements?

Accepted Answer

A)  subfranchises to other independent businesses and thus assumes the role of the local franchisor 
B)  The franchisee provides completely standardized business activities, replicated across diverse markets. 
C)  franchise networks where franchisor provides a lump-sum payment to get started in a foreign market 
D)  franchise networks that pay fewer royalties to franchisors 
A)  subfranchises to other independent businesses and thus assumes the role of the local franchisor 
B)  The franchisee provides completely standardized business activities, replicated across diverse markets. 
C)  franchise networks where franchisor provides a lump-sum payment to get started in a foreign market 
D)  franchise networks that pay fewer royalties to franchisors A

Question 2

In a licensing agreement, the licensee is both the owner and user of intellectual property.

Accepted Answer

A) True 
 B)False  False

Question 3

How are trademarks established in the United States and abroad? What are some of the difficulties faced by firms regarding the protection of trademarks? Explain with an example.

Accepted Answer

In the United States and a number of other countries, firms acquire rights to trademarks through first use and continuous usage. However, in others, rights to trademarks are acquired through registration with government authorities, and many countries require local use of the registered mark to maintain the registration. When a firm registers its trademark, it formally notifies government authorities that it owns the trademark and is entitled to intellectual property protections. The convention of gaining ownership to a trademark simply through registration has caused concerns for many firms. For example, McDonald's was frustrated to learn, when it wanted to enter South Africa in 1993, that a local trader had already applied both to register the McDonald's trademark for his own use, and to have the company's rights to the trademark withdrawn. The South African Supreme Court actually ruled in favor of the local entrepreneur. McDonald's eventually won on appeal but only after spending a significant sum in legal fees. Also, in China, the French apparel company Hermès lost the right to the Chinese version of its name because a local company had already registered it

Question 4

Which of the following is an advantage of franchising to the franchisee?

Accepted Answer

A)  reduced expenses as the franchisor provides supplies, equipment, and products 
B)  Minimum initial investments or royalty payments are applicable. 
C)  use of a well-known, recognizable brand name 
D)  The franchisee holds much power, including superior bargaining power. 
A)  reduced expenses as the franchisor provides supplies, equipment, and products 
B)  Minimum initial investments or royalty payments are applicable. 
C)  use of a well-known, recognizable brand name 
D)  The franchisee holds much power, including superior bargaining power.

Question 5

Advanced economies have taken the lead in signing treaties that support international protection of intellectual property.

Accepted Answer

A) True 
 B)False

Question 6

An advantage of licensing is that firms are able to ________.

Accepted Answer

A)  enter markets with extensive trade barriers 
B)  guarantee a basis for future expansion 
C)  control how the licensed asset is used 
D)  resolve disputes easily 
A)  enter markets with extensive trade barriers 
B)  guarantee a basis for future expansion 
C)  control how the licensed asset is used 
D)  resolve disputes easily

Question 7

Which of the following is TRUE about cross-border contractual relationships?

Accepted Answer

A)  It is a more visible strategy than FDI and draws a lot of criticism from the local market. 
B)  They are more susceptible to volatility and risk compared to FDI. 
C)  They attract less attention and less of the criticism sometimes directed at firms that enter through more visible strategies such as FDI. 
D)  Focal firms use contractual relationships as an advanced entry strategy in foreign markets. 
A)  It is a more visible strategy than FDI and draws a lot of criticism from the local market. 
B)  They are more susceptible to volatility and risk compared to FDI. 
C)  They attract less attention and less of the criticism sometimes directed at firms that enter through more visible strategies such as FDI. 
D)  Focal firms use contractual relationships as an advanced entry strategy in foreign markets.

Question 8

In typical licensing agreements, the licensee compensates the licensor with a down-payment plus ongoing royalties based on sales.

Accepted Answer

A) True 
 B)False

Question 9

Licensing and franchising are complex undertakings and require skillful research, planning, and execution.

Accepted Answer

A) True 
 B)False

Question 10

Wonder Cat Licensing (Scenario)
Wonder Cat is a popular, new cartoon series created by the U.S-based All Cartoon Channel (ACC). Currently, the only Wonder Cat item available for sale are shirts that are sold exclusively through the ACC Web site. The cartoon series is a big hit in China, and as a result ACC has been approached by a Chinese firm about a licensing agreement. ACC executives are considering the pros and cons of such an agreement before making any final decisions.
-Which of the following statements most likely supports an ACC decision to enter into a licensing agreement with the Chinese firm?

Accepted Answer

A)  Royalties from toys and apparel would be initially minimal. 
B)  The Wonder Cat brand's products could be easily counterfeited in other markets except in the Chinese markets. 
C)  The Chinese government restricts complete ownership of local operations by foreign firms. 
D)  China exclusively opts for high-control strategies such as FDI. 
A)  Royalties from toys and apparel would be initially minimal. 
B)  The Wonder Cat brand's products could be easily counterfeited in other markets except in the Chinese markets. 
C)  The Chinese government restricts complete ownership of local operations by foreign firms. 
D)  China exclusively opts for high-control strategies such as FDI.

Question 11

Host-country governments often encourage franchising because most of the money generated by the franchise remains in the local economy.

Accepted Answer

A) True 
 B)False

Question 12

In international leasing, a major advantage for the lessor is the ability to gain quick access to target markets, while putting assets to use earning profits.

Accepted Answer

A) True 
 B)False

Question 13

Turnkey contracting is an arrangement in which the focal firm or a consortium of firms plans, finances, organizes, manages, and implements all phases of a project abroad and then hands it over to a foreign customer after training local workers.

Accepted Answer

A) True 
 B)False

Question 14

A cross-border contractual relationship, which is governed by an explicit contract, provides the focal firm with ________ over the foreign partner.

Accepted Answer

A)  a low level of control 
B)  a moderate level of control 
C)  a high level of control 
D)  seldom any control 
A)  a low level of control 
B)  a moderate level of control 
C)  a high level of control 
D)  seldom any control

Question 15

By establishing a brand name and market power through a licensing agreement, licensors are able to ________.

Accepted Answer

A)  establish a more durable presence in the local market 
B)  control the use of the licensed asset 
C)  control the dissipation of important intellectual property to competitors 
D)  avoid the risk of creating a future competitor 
A)  establish a more durable presence in the local market 
B)  control the use of the licensed asset 
C)  control the dissipation of important intellectual property to competitors 
D)  avoid the risk of creating a future competitor

Question 16

Which of the following is an essential method used by a focal firm to protect its intellectual property (IP) in a foreign country?

Accepted Answer

A)  lobbying foreign governments for stronger intellectual property laws 
B)  avoiding trade in countries with weak intellectual property laws 
C)  bribing foreign government officials 
D)  research to understand IP laws and protections in target countries 
A)  lobbying foreign governments for stronger intellectual property laws 
B)  avoiding trade in countries with weak intellectual property laws 
C)  bribing foreign government officials 
D)  research to understand IP laws and protections in target countries

Question 17

Which of the following is an example of licensing?

Accepted Answer

A)  Saks Inc. entered China by giving a retail chain in China the authority to use Saks Fifth Avenue name for a flagship department store in Shanghai. 
B)  An Indian automobile manufacturing company buys engines from a Japanese manufacturer for its environmentally friendly cars. 
C)  A South-Korean consumer electronics manufacturer produces the screens for its brand of television and sends orders to a factory in China to manufacture the casing for the television. 
D)  A U.K-based motorcycle manufacturer produces limited-edition customizations of the company's stock models and sells it to customers around the world. 
A)  Saks Inc. entered China by giving a retail chain in China the authority to use Saks Fifth Avenue name for a flagship department store in Shanghai. 
B)  An Indian automobile manufacturing company buys engines from a Japanese manufacturer for its environmentally friendly cars. 
C)  A South-Korean consumer electronics manufacturer produces the screens for its brand of television and sends orders to a factory in China to manufacture the casing for the television. 
D)  A U.K-based motorcycle manufacturer produces limited-edition customizations of the company's stock models and sells it to customers around the world.

Question 18

Which of the following is characteristic of a know-how agreement?

Accepted Answer

A)  exclusive rights to reproduce original art work 
B)  permission to use manufacturing facilities for a fee 
C)  exchanging technological or management information for royalties 
D)  trading the use of a name brand for management advice 
A)  exclusive rights to reproduce original art work 
B)  permission to use manufacturing facilities for a fee 
C)  exchanging technological or management information for royalties 
D)  trading the use of a name brand for management advice

Question 19

Which of the following is TRUE about franchising as an entry strategy?

Accepted Answer

A)  It provides firms with minimum control over foreign operations. 
B)  It is an ownership-based international business activity. 
C)  It provides ownership with greater control but also typically restricts a firm's ability to expand more rapidly abroad. 
D)  It is typically characterized as an unstable, short-term entry strategy. 
A)  It provides firms with minimum control over foreign operations. 
B)  It is an ownership-based international business activity. 
C)  It provides ownership with greater control but also typically restricts a firm's ability to expand more rapidly abroad. 
D)  It is typically characterized as an unstable, short-term entry strategy.

Question 20

Including non-compete clauses in employee contracts helps prevent employees from serving competitors for some years after leaving the firm.

Accepted Answer

A) True 
 B)False

Which of the following is characteristic of master franchise arrangements?

In a licensing agreement, the licensee is both the owner and user of intellectual property.

How are trademarks established in the United States and abroad? What are some of the difficulties faced by firms regarding the protection of trademarks? Explain with an example.

Which of the following is an advantage of franchising to the franchisee?

Advanced economies have taken the lead in signing treaties that support international protection of intellectual property.

An advantage of licensing is that firms are able to ________.

Which of the following is TRUE about cross-border contractual relationships?

In typical licensing agreements, the licensee compensates the licensor with a down-payment plus ongoing royalties based on sales.

Licensing and franchising are complex undertakings and require skillful research, planning, and execution.

Host-country governments often encourage franchising because most of the money generated by the franchise remains in the local economy.

In international leasing, a major advantage for the lessor is the ability to gain quick access to target markets, while putting assets to use earning profits.

Turnkey contracting is an arrangement in which the focal firm or a consortium of firms plans, finances, organizes, manages, and implements all phases of a project abroad and then hands it over to a foreign customer after training local workers.

A cross-border contractual relationship, which is governed by an explicit contract, provides the focal firm with ________ over the foreign partner.

By establishing a brand name and market power through a licensing agreement, licensors are able to ________.

Which of the following is an essential method used by a focal firm to protect its intellectual property (IP) in a foreign country?

Which of the following is an example of licensing?

Which of the following is characteristic of a know-how agreement?

Which of the following is TRUE about franchising as an entry strategy?

Including non-compete clauses in employee contracts helps prevent employees from serving competitors for some years after leaving the firm.

Introduction: What Is International Business

Globalization of Markets and the Internationalization of the Firm

The Cultural Environment of International Business

Ethics, Corporate Social Responsibility, Sustainability and Corporate Governance in International Business

Theories of International Trade and Investment

Political and Legal Systems in National Environments

Government Intervention and Regional Economic Integration

Understanding Emerging Markets

The International Monetary and Financial Environment

Financial Management and Accounting in the Global Firm

Strategy and Organization in the International Firm

Global Market Opportunity Assessment

Exporting and Global Sourcing

Foreign Direct Investment and Collaborative Ventures

Marketing in the Global Firm

Human Resource Management in the Global Firm

Filters

Exam 15: Licensing, Franchising, and Other Contractual Strategies

Which of the following is characteristic of master franchise arrangements?

In a licensing agreement, the licensee is both the owner and user of intellectual property.

How are trademarks established in the United States and abroad? What are some of the difficulties faced by firms regarding the protection of trademarks? Explain with an example.

Which of the following is an advantage of franchising to the franchisee?

Advanced economies have taken the lead in signing treaties that support international protection of intellectual property.

An advantage of licensing is that firms are able to ________.

Which of the following is TRUE about cross-border contractual relationships?

In typical licensing agreements, the licensee compensates the licensor with a down-payment plus ongoing royalties based on sales.

Licensing and franchising are complex undertakings and require skillful research, planning, and execution.

Host-country governments often encourage franchising because most of the money generated by the franchise remains in the local economy.

In international leasing, a major advantage for the lessor is the ability to gain quick access to target markets, while putting assets to use earning profits.

Turnkey contracting is an arrangement in which the focal firm or a consortium of firms plans, finances, organizes, manages, and implements all phases of a project abroad and then hands it over to a foreign customer after training local workers.

A cross-border contractual relationship, which is governed by an explicit contract, provides the focal firm with ________ over the foreign partner.

By establishing a brand name and market power through a licensing agreement, licensors are able to ________.

Which of the following is an essential method used by a focal firm to protect its intellectual property (IP) in a foreign country?

Which of the following is an example of licensing?

Which of the following is characteristic of a know-how agreement?

Which of the following is TRUE about franchising as an entry strategy?

Including non-compete clauses in employee contracts helps prevent employees from serving competitors for some years after leaving the firm.

Introduction: What Is International Business

Globalization of Markets and the Internationalization of the Firm

The Cultural Environment of International Business

Ethics, Corporate Social Responsibility, Sustainability and Corporate Governance in International Business

Theories of International Trade and Investment

Political and Legal Systems in National Environments

Government Intervention and Regional Economic Integration

Understanding Emerging Markets

The International Monetary and Financial Environment

Financial Management and Accounting in the Global Firm

Strategy and Organization in the International Firm

Global Market Opportunity Assessment

Exporting and Global Sourcing

Foreign Direct Investment and Collaborative Ventures

Marketing in the Global Firm

Human Resource Management in the Global Firm

Filters