- contract provides focal firm with moderate level of control over foreign partner. gives an inventor the right to prevent others from using or selling an invention for a fixed period-typically up to 20 years. Provide dynamic, flexible choice. Under an international franchise agreement, a company (the franchiser) grants a foreign company (the franchisee) the right to use its brand name and to sell its products or services. Some of these market entry strategies include exporting, licensing, franchising, partnering, joint ventures, turnkey projects, and greenfield investments. Read other and watch their success stories!. C) A local firm allows the focal firm to blend into the local market, attracting less. Equity relations allow firms to have some direct control, while contractual does not. In other words, ownership rights in franchising are seen in the ratio of company-owned to franchisee-owned stores and residual income rights, as traditionally conceptualized in Fig. 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. Setting up a new wholly owned subsidiary in the host country. 5 Explain the advantages and disadvantages of franchising. 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. Turnkey contracting. 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). 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. 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. Week 12 Licensing, Franchising, and Other Contractual Strategies 1. Market entry modes for international businesses. 15. Flashcards. doc from MANAGEMENT BCPC202 at University of Professional Studies,Accra. 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. Abstract. 15. - Firms that use licensing often can avoid expensive entry as is usually required in FDI. Process. 82. Fresh features from the #1 AI-enhanced learning platform. The main reasons companies form strategic alliances are to gain access. Typically, this licence will cover know-how and other confidential information, trademarks. Question 4. Why would a company choose to use a contractual mode of entry rather than an investment mode? Contractual forms of entry (i. g. 3. Test. Which of the following is provided by the licensor in a licensing agreement? A) a monetary down-payment plus royalties for all products sold. International Business Strategy, Management & the New Realities. 16: Licensing, Franchising, and Other Contractual Strategies Flashcards | Quizlet Ch. What Are The Types of International Business. In this chapter, we address various types of cross-border contractual relationships, including licensing and franchising. 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. Study with Quizlet and memorize flashcards containing terms like Strategic alliances involve: a. import/export, joint ventures d. In 1974 the company started franchising in the USA and later it was uses in order to expand globally. Global Market Opportunity Assessment 348. Exporting is a method of expansion where. drive early entrants out of the market. Flashcards. contractor supplies managerial know how. Disadvantages of licensing. Which of the following is key to licensing strategy success? Avoidance of barriers for foreign companies doing business. Create flashcards for FREE and quiz yourself with an interactive flipper. Uploaded By ebrarpatriot. View chapter 15. Ensuring ongoing competitive advantage. One of the key differences between a franchise and a license is the limitation set out in licensing agreements. Joint R&D iv. Technically, the contract binding. and popular strategies for business expansion. Low control, low local knowledge, potential negative environmental impact of transportation. Franchise Agreements are the core operating principles that define the relationship between the franchisor and the franchisee. 15. 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. 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. Franchising. When considering entering international markets, there are some significant strategic and tactical decisions to be made. , licensing and franchising) have lower up-front costs than investment modes do. the franchising and licensing as market entry mode in general and in hotel industry. Bashar Hassan. Exporting. Chapter 15: Licensing, Franchising, and Other Contractual Strategies. According to Franchise Business Review, franchising fees typically range from $25,000-$50,000 on average. Contract duration and renewal 2. When the executives in charge of a firm decide to enter a new country, they must decide how to enter the country. includes exchange of intangibles and services 3. Contractual Entry Modes 3. On the other hand, international licensing is a foreign market entry mode that presents some. Protecting Intellectual Property. 2. Importing involves purchasing products from other countries and reselling them in one’s own. , Contractual alliances include all of the following except: a. Learn. Learn. 3. Country Comparatives Guides. Franchising. Fast entry, low risk. The contractual arrangements ( CA ) mode of entry is in most cases a stepping stone to international production. C) They attract less attention and less of the criticism sometimes directed at firms. in exchange for royalties, license fees, or some other form of compensation Patent Trade secret Brand name Product formulations. chapter 16 licensing, franchising, and other contractual contractual entry strategies in international business: exchanges where the relationship between the. Learn. Quiz 15: Licensing, Franchising, and Other Contractual Strategies. Strategic alliances can take many different forms, such as joint ventures, licensing agreements, and marketing alliances. 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. The difference is that the franchiser provides a bundle of services and products to. Franchising is a business model where the franchisor extends business know-how, intellectual rights and the right to operate in the name of a brand for consideration (usually in the form of fees and royalties) to the franchisee. with direct or area franchise forms of licensing (P2a). docx - Chapter 15: Licensing. Study with Quizlet and memorize flashcards containing terms like Contractual entry strategies in IB, Licensing def, Licensing pro and more. Verified Answer for the question: [Solved] Before undertaking contractual entry strategies abroad, management _____. Learn. •Franchising is an advanced form of licensing in which the focal firm, the franchisor,. Unique aspects of contractual relationships They are governed by a contract that provides the focal firm with moderate level of control over the foreign. Disadvantages of franchising to the franchisee. d. 1. On the other hand, franchise agreements allow the use of trademarks, additional intellectual. reduce local perceptions of the focal firm as a foreign enterprise Study with Quizlet and memorize flashcards containing terms like 1. b. 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 faster with spaced repetition. Test. 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. Match. Two Types of Contractual Relationships. To sum up, there are various methods that a firm can utilize in its foreign market entry market strategy. In franchising, decision rights encompass the assignment of rights for use of system- and outlet-specific assets in contracts. Direct exporting is often considered the default choice for new market entry. Advantages:The commercial center does this by familiarizing U. Franchising is governed by an elaborate agreement specifying the responsibilities and duties of both the parties involved. Licensing, Franchising, and Other Contractual Strategies. Microfranchises: Franchises operated by one or two people. D)It is typically characterized as an unstable, short-term entry. destineeashlee. Exporting and Countertrade; 14. The organization that gives the access is the licensor. Stage Three: Specify a specific format that is either equity based or contractual (nonequity based). 13 8. when the franchisor has been successful domestically because of unique products and advantageous operating procedures and systems. Chapter 15 Licensing, Franchising and other Contractual Strategies Internatonal Business:Contractual entry strategies in international business. provides technical specifications to a subcontractor or local manufacturer. 2. Chapter 16 - Licensing, Franchising and other Contractual Strategies. , Licensing. 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 subsidiaryA franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system. • 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. 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. License 101 Where lives Entering?. Patents provide inventors the right to prevent another person or company from selling or using an invention for up. Table 7. Quiz 15: Licensing, Franchising, and Other Contractual Strategies. Chapter 16: Licensing, Franchising and other Contractual Strategies. IBUS CH 15 Licensing, Franchising, and Other Contractual Strategies. Licensing •A contractual agreement whereby one company (the licensor) makes an asset. - As entry strategy, licensing requires neither substantial capital investment nor extensive involvement of licensor in foreign markets. ) Bringing ideas for business in other countries to new markets. Licensing involves granting rights to use intellectual property, while franchising grants rights to use an entire business model. Licensing, on the other hand, is a form of private contract between parties and. Verified Answer for the question: [Solved] When compared to licensing agreements, the relationships established in franchising arrangements are typically volatile and short-term. 1. doc from ADMN 05 at The Islamic University of Gaza. The organization that obtains the access is the licensee. 15 ~ Licensing, Franchising, and Other Contractual Strategies. Match. Chapter 15. 3. It is unusual to see a direct comparison between, say, licensing and joint ventures, or between franchising and subcontracting. When the parties make licensing or franchising agreement, the parties should critically. 2. a. includes exchange of intangibles and services 3. Licensing is designed to reduce the risks involved in doing business for everyone involved. c. Created by. Global Marketing Strategy for. Which mode is to be used in which situation 5. arrangement in which the focal firm or a consortium of firms plans, finance, organizes, manages. 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. The definition is important because franchises are covered by securities law while licenses are covered by contract law. Licensing agreement specifies nature of relationship between licensor and licensee. Buckley BA (Econ), MA, Phd Chapter 90 Accesses Abstract This. How Aristotle can help: the philosophy of business If your company is ever going to implement a successful licensing strategy, the corporate licensing team had better take to heart the wisdom of Aristotle. About Press Copyright Contact us Creators Advertise Developers Terms Privacy Policy & Safety How YouTube works Test new features NFL Sunday Ticket. - advanced form of licensing where firm allows another the right to an entire business system in exchange for fees, royalties, other forms of compensation. When a firm allows others toIn Malaysia, franchising and licensing are governed under different laws. Franchising is a variation of licensing strategy in which there is a contract between the parent company franchiser. Licensing, franchising and other contractual strategies. Contractual entry strategies in international business. These rights are usually protected by a patent or some other intellectual right. Try it free3. 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. equity mode of entry into foreign markets limited to a contractual agreement. Human Resource Management. -the different modes can be further classified on the basis of equity or non-equity requirements. In deciding which method to adopt, it is important that a firm evaluate each entry mode’s. Solved . c. The book connects to students of the technological age, facing a diverse and evolving economic environment fueled 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 ________. Test. Cross-border exchanges in which the relationships between the focal firm and its foreign partner is governed by an explicit contract. Provide dynamic, flexible choice. Several companies get patent their technology and other products that they don’t want anyone else to use without their consent. 1 International-Expansion Entry Modes. 15. Discover. 15. True or false: Transportation costs would have an effect on which entry mode a company uses. Licensing, Franchising, and Other Contractual Strategies 438 Part 5 Functional Area Excellence 464 16. make it easy for later entrants to win business. Learn. What Are The Types of International Business. CONTRACTUAL ENTRY STRATEGIES Two common types of contractual entry strategies are licensing and franchising. trading bloc c. A patent exclusively refers to a distinctive design, symbol, logo, word, or series of words placed on a product label. Joint venture iii. They typically include the exchange of intangibles and services. 6. The five most common methods include exporting, licensing and franchising, partnering and strategic alliance, acquisition, and Greenfield venture. International Business: The New Realities, 5th Edition caters to a post-millennial student audience, the most diverse and educated generation to date. The legal claim through which the proprietary assets of firms and individuals are protected from unauthorized use by other parties. Licensing is designed to reduce the risks involved in doing business for everyone involved. Outline the challenges facing professional service firms when they internationalize. 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. b. In franchising, the franchisor licenses the. export restraint b. The problems facing franchise companies in international transactions are relatively less formidable than those facing other service sectors. 15. Several strategies for franchising in East. B) It ensures payment from the licensee to the licensor upon receipt of an export shipment. strategic alliances. Essentially, you need to decide whether you want to buy a franchise or own your own business while pursuing licensing opportunities. 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. The difference between a franchise contract and a licensing contract is that a. The Franchiser requires the franchisee to make a minimum payment of $500 or more, and. However, they enjoy a lot more freedom than franchisees. Why would a company choose to use a contractual mode of entry rather than an investment mode? Contractual forms of entry (i. Licensing is governed by a licensing agreement, which involves a one-time transfer of property or rights for a fee. Verified Answer for the question: [Solved] The reputation of a licensor will be jeopardized by a licensing agreement if the licensee _____. True/False . . These options vary in terms of how. Question 74. wholly owned subsidiaries. On the most basic level, the difference between a franchise and a license is the amount of support you can expect to receive. Compromises between short-term transactions and long-term solutions. Either way, the licensor gets a kickback—as a. Licensing,. Flashcards. _____ these are the items owned by a franchisee that has the same monetary value. a. External: Operating Enviornment. Study with Quizlet and memorize flashcards containing terms like Contractual Entry Strategies in International Business, Intellectual property, Intellectual Property Rights and more. A) bribe government officials to reduce nontariff trade barriers B) have a subjective view of moral and ethical standards C) conduct advance research on the host country's laws on intellectual property D) appoint managers from the. True/False . Licensing. 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. It. Study Licensing, franchising and other contractual strategies (Key Terms) flashcards from Lewis Mellor's class online, or in Brainscape's iPhone or Android app. Start studying Ch. 2. From a licensor standpoint, there are fewer risks in the selling and service of what is being. 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. Expert Help. On the other hand,. Some companies use direct exporting, in which they sell the product they manufacture in international markets without third-party. With the export strategy the marginal cost of firm E is higher due to. Created by. 4 Understand franchising as an entry strategy. 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. 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. 1. Default and termination 3. A licensing agreement allows a foreign company to sell a company’s. Second, some firms find it less risky and more profitable to export. Subway is a company that has spread worldwide through its expansion strategy. Licensing specifies the territory as well as period. Patents provide inventors the right to prevent another person or company from selling or using an invention for up. 2. AFM 333 – Ch 16 Licensing, Franchising, and Other Contractual Strategies. final ch 15 man3600. c. 15. A patent exclusively refers to a distinctive design, symbol, logo, word, or series of words placed on a product label. Strategies: Licensing, Investment, and Strategic. 4 Understand franchising as an entry strategy. Under a franchise agreement, a company grants a foreign company the right to use its brand name and sell its products. In this section, we will explore the traditional international-expansion entry modes. International Business: Strategy, Management, and the New RealitiesStudy with Quizlet and memorize flashcards containing terms like contractual entry strategies in IBUS, intellectual property, intellectual property rights and more. • Contractual entry strategies (franchising, licensing, management. BUS. Flashcards. Master Franchise. contract manufacturing. A modern approach to international business. Licensing, Franchising and. Advantages. 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. View final ch 15 man3600. Licensing is a legal process in which one firm pays to use or distribute another firm's resources. contract manufacturing. Equity-based arrangements. Other Contractual Entry Strategies Chapter 15 Contractual Entry Strategies There are two common types of contractual entry strategies; 1. Question 14. Can be pursued independently or in conjunction with other entry strategies. In the franchising packages trademarks, copyright, patents and other things often are included. Franchising is a faster, cheaper form of expansion than adding company-owned stores, because it costs the parent company much less when new stores are owned and operated by a third party. " Early market entry is generally considered a competitive. Study Resources. 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. 15. Exhibit 15. 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. 70. 4. Licensing: Licensing offers several benefits for both the licensor and the licensee. 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. Multiple Choice . Verified Answer for the question: [Solved] Which of the following challenges is applicable to the franchisee in a franchising agreement? A) The franchisee must make their own arrangements to acquire initial training and know-how. 4. Test. Flashcards; Learn; Test;Exporting. Chapter 16- Licensing, Franchising, and Other Contractual Strategies Flashcards | Quizlet Chapter 16- Licensing, Franchising, and Other Contractual Strategies 5. Cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an explicit contract. On the other hand, franchising is a business model whereby a company (franchisor) allows another company (franchisee) to use its. if the franchisor has already achieved considerable success in franchising in its domestic market. 1. 3. Which of the Following is Provided by the Licensor in a Licensing. Contractual Entry Strategies. Although both franchising and MSCs are non-equity modes, there are important differences between. 15. 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) _____. Get Quality Help. Change Product. 1 Advantages and Disadvantages of Di erent Modes of Internationalization. Match. Franchising is an example of a contractual vertical marketing system. Question 2. Flashcards. firm can pursue individually or in conjunction with other entry strategies 4. A licensing agreement is generally less complicated and easier to finalize than a franchise agreement. Flashcards. They provide dynamic flexible choice View LICENSING from BUSINESS A M0804455 at Ain Shams University. View Chapter 16 & 17 MAN 3600 from MAN 3600 at Florida State University. Ch. 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". Describes the appearance or features of a product. Governed by : Contract law governs licensing. ) Finding financing for a new business in other countries. 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. 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. Subscribe to newsletters Subscribe: $29. Licensing, Franchising, and Other Contractual Strategies. It is quite similar to the "franchise" operation. Verified Answer for the question: [Solved] Azoo Government Projects (Scenario) The nation of Azoo needs the assistance of a contractor to construct a new bridge and a subway system. CONTRACTUAL STRATEGIC ALLIANCES i. 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. A franchise agreement is a contract between the business owner (franchisor) and the franchisee. 1 Explain contractual entry strategies. The license agreement permits the use of trademarks, nothing more. A. 1 Explain contractual entry strategies. Chapter 15: Licensing, Franchising, and Other Contractual Strategies Key Elements Contractual Entry strategies in. Intellectual Property rights – legal claims that protect proprietary assets of firms and indivduals from unauthorized use by other parties III. by Cavusgil, Knight & Riesenberger. A franchised. trademark. 2. trademark. B. 5 Contract Manufacturing 7. Revenues are usually more modest than with other entry strategies. C) The licensee cannot cancel the contract with the. a. Direct exporters often sell directly to a consumer (B2C), a business (B2B), or a distributor in a foreign country. The license agreement permits the use of trademarks, nothing more. 3. Chapter 16 - Licensing, Franchising, and Other Contractual Strategies. Learn. 6 billion in revenues. 1. Verified Answer for the question: [Solved] In a licensing agreement, ________ is responsible for local sales. Ch 16: Licensing, Franchising, and other Contractual Strategies. 4. What are unique aspect of contractual relationship (5) 1. Licensing is a type of market entry whereby a company in one country transfers the right of a company in another country to use its unique production processes, patents, trademarks, technological achievements, and other valuable skills for a fee that is established under the contract. 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. Flashcards. 2 ABSTRACT Presently, companies wanting to engage in international trade have a wide pool of choices to choose from. 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. Licensing, Franchising, and Other Contractual Strategies Learning Objectives • Explain contractual entry strategies. Staffing leverage . Licensing, Franchising, and Other Contractual Strategies. Beyond importing, international expansion is achieved through exporting, licensing arrangements, partnering and strategic alliances An international entry mode involving a contractual agreement between two. 3. 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.