13 8. . 1 International Entry Modes 7. chesiebels. External: Operating Enviornment. 4 Franchising 7. Contract manufacturing iv. 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. Patent. Typically, franchise agreements require a longer-term commitment from both parties involved, usually ten years or more, while management contracts tend to be shorter-term agreements, usually ranging from one to five years. A franchise agreement is a contract between the business owner (franchisor) and the franchisee. pdf from BUST 08009 at University of Edinburgh. a. When a firm allows others toIn Malaysia, franchising and licensing are governed under different laws. The entry strategy in global business with the lowest risk is _____, while _____ is considered to have higher risk than the choices available. Focal firm has moderate level of control over the foreign partner. Doc Preview. Question 1. If you think of a franchisor (the brand) as a. Study Chapter 16 flashcards. 2. Florida State University. Multiple Choice . Get Quality Help. A franchised. Compromises between short-term transactions and long-term solutions. The equity modes category includes joint ventures and wholly. Verified Answer for the question: [Solved] The reputation of a licensor will be jeopardized by a licensing agreement if the licensee _____. One of the major differences when it comes to franchising vs. A licensing is an agreement whereby a licensor grants the rights to intangible property (patents, inventions, formulas, processes, designs, copyrights, and trademarks) to another entity (licensee) for a specified period and in return, the licensor receives a royalty/fee from the licensee. Although both franchising and MSCs are non-equity modes, there are important differences between. Exporting involves marketing the products you produce in the countries in which you intend to sell them. The nation lacks the skilled labor and technical know-how to handle such large-scale projects. at completion of the contract, the foreign client is handed the "key. 3. Exporting is a low-risk strategy that businesses find attractive for several reasons. RenaeBoleyn. . Franchising is a variation of licensing strategy in which there is a contract between the parent company franchiser. management contracts. The licensor provides no technical support or assistance in most cases. 15 Licensing, Franchising, and Other Contractual. View Test Prep - licensing and franchising from ECONOMICS 12 at Xavier Institute Of Management & Research. Cross-border exchanges in which the relationships between the focal firm and its foreign partner is governed by an explicit contract. Licensing is governed by a licensing agreement, which involves a one-time transfer of property or rights for a fee. a. gives an inventor the right to prevent others from using or selling an invention for a fixed period-typically up to 20 years. 5 Explain the advantages and disadvantages of franchising. 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. Franchising; Meaning: This is a contractual agreement in which one firm gets access to another firm’s patent, technology and other things in exchange for money. turnkey contracting. 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. cross-border contractual relationships share several common characteristics. trading bloc c. Turnkey Project b. Licensing. They provide dynamic flexible choice View LICENSING from BUSINESS A M0804455 at Ain Shams University. equity mode of entry into foreign markets limited to a contractual agreement. pdf from ECON 102 at Warsaw School of Economics. Royalties. Process. Learn. Flashcards. Ch. 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. 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. Its goal. 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. Includes such knowledge-based assets of the firm or individuals as industrial designs, trade secrets, inventions, works of art, literature, and other "creations of the mind". 15 ~ Licensing, Franchising, and Other Contractual Strategies. Test. 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. Mode Characteristics Advantages Disadvantages. These options vary in terms of how much. On the other hand, franchise agreements allow the use of trademarks, additional intellectual. Created by. • 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. Licensing, Franchising and other contractual strategies. Contracts. Why would a company choose to use a contractual mode of entry rather than an investment mode? Contractual forms of entry (i. 2 Understand licensing as an entry 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. Firms often combine franchising with other entry strategies. wholly owned subsidiaries. Master Franchise. For example, a restaurant or a salon can be franchised, but not the products they use to provide the said services. Product Invention. ability to preempt rivals and capture demand by establishing a strong brand name. 6 Joint Ventures Chapter 8. Docsity. Licensing is designed to reduce the risks involved in doing business for everyone involved. 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. It’s a legally binding document that spells out—in great detail— the integrated touch points of running the business from the franchisor and franchisee point of view. 1. Major global. Internal: Strategic. In existing literature, most strategies are appraised as alternatives to exporting, or as alternatives to green-field FDI. 1 International-Expansion Entry Modes. 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. Flashcards. The license has much stricter restrictions than the franchise. The agreement so creates a franchise relationship is the franchise agreement and aforementioned parties to a franchise agreement are the franchisor and to french. Chapter 15 Licensing, Franchising and other Contractual Strategies Internatonal Business: Other mark ups and contributions like finance charges, sale of related products etc. 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. Franchising VS Licensing. Study with Quizlet. In licensing, the licensor has limited control over the operations of the licensee, whereas franchising involves extensive control and support provided by the franchisor. 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. Unique Aspects of Contractual Relationships. 2 ABSTRACT Presently, companies wanting to engage in international trade have a wide pool of choices to choose from. Some firms view licensing as a supplementary strategy to other entry strategies, such as exporting or FDI. d. Licensing as an Entry Strategy a. docx from INT- 113 at Southern New Hampshire University. dynamic, flexible choices 5. In the franchising packages trademarks, copyright, patents and other things often are included. 1. 0 (1. Representatives of the Azoo government are reviewing the project bids. Licensing is a contractual agreement whereby, in exchange for a royalty or fee, a company gives the right to another company to use a trademark, know-how, or other proprietary technology. D) strategic decision making. 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 Chapter 16 - Licensing, Franchising and other Contractual Strategies flashcards from Tia-Jane Maggs's class online, or in Brainscape's iPhone or Android app. 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. a. Verified Answer for the question: [Solved] When compared to licensing agreements, the relationships established in franchising arrangements are typically volatile and short-term. Test. 7 Using Demographics to Guide Global Marketing Strategy 6. Total views 38. The impact of strategy considerations can most easily be illustrated in a Cournot duopoly setting as displayed in Fig. Typically, the franchise agreement is for ten years. Licensing is an agreement between Licensor and licensee wherein one organization gives the other organization access to its patents, trade secrets, or technology for a fee known as a royalty. View Homework Help - Week 4 - Subway Case. Learn. 3. Reasons for Licensing:Get Quality Help. Verified Answer for the question: [Solved] Which of the following is TRUE about cross-border contractual relationships? A) It is a more visible strategy than FDI and draws a lot of criticism from the local market. Correct Answer: Access For Free . Match. A number of foreign market entry modes exist, including: exporting, licensing, franchising, joint venture and wholly owned subsidiary. Greenfield Strategy v. When considering entering international markets, there are some significant strategic and tactical decisions to be made. 5Explain the advantages and disadvantages of franchising. Typically include the exchange of intangibles and services. The definition is important because franchises are covered by securities law while licenses are covered by contract law. Organising for the Strategy. fAdvantages & Disadvantages of. the franchising and licensing as market entry mode in general and in hotel industry. proficient interviews, and industry leading guides that cover everything from franchising basics to advanced franchise growth strategies. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Securities law govern. Study Resources. IBUS CH 15 Licensing, Franchising, and Other Contractual Strategies. 1. arrangement in which the focal firm or a consortium of firms plans, finance, organizes, manages. Ch. Created by. strategies. Study with Quizlet and memorize flashcards containing terms like Strategic alliances involve: a. In licensing, the licensor has limited control over the operations of the licensee, whereas franchising involves extensive control and support provided by the franchisor. 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. What Are The Types of International Business. Licensing, franchising and other contractual strategies. Management Contract 4. entered China by giving a retail chain in China the authority to use Saks Fifth Avenue name for a flagship department store in Shanghai. They are governed by a contract that provides the focal firm a moderate level of control over the foreign partner. master franchise. As a disclosure, my company is a franchise providing. View Overview. What are Franchising? Franchising is an business agreement that includes the license is a trademark, of payment of a fee, and control over how the underlying franchises business has operated. focal firm does everything for business and hands it over to customer after training. other contractual agreements and equity modes (wholly owned subsidiary or joint venture). Study with Quizlet and memorize flashcards containing terms like Contractual Entry Strategies in International Business, Intellectual Property, Intellectual Property Rights and more. The Franchiser requires the franchisee to make a minimum payment of $500 or more, and. A license is much more limited than a. with direct or area franchise forms of licensing (P2a). These rights are usually protected by a patent or some other intellectual right. Another popular way to expand overseas is to sell franchises. Licensing and franchising. A strategic alliance is a collaborative agreement between two or more companies to pursue mutually beneficial objectives. • Licensing, franchising and other contracting These activities are carried out by a wide variety of institutions such as MNEs, small and medium-sized enterprises and financial entities. 2 Exporting 7. 4 Understand franchising as an entry strategy. In addition to the standard license process, a company will assist in establishing the business with the design, equipment, organization, and marketing. 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 subfranchise to other franchisees, assuming the role of local franchisor. Contractual entry strategies in international business. Quiz 15: Licensing, Franchising, and Other Contractual Strategies. focal firm does everything for business and hands it over to customer after training. 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. when the factors that contributed to domestic success are transferable to foreign locations. In turnkey contracting, one or several firms plan, finance, organize, and. 1 Advantages and Disadvantages of Di erent Modes of Internationalization. The non-equity modes category includes export and contractual agreements. 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. Match. Recent advances in digitalization and increasing integration of international markets are paving the way for a new generation of firms to use non-traditional entry modes that are largely marginalized in previous entry mode studies. One of the key differences between a franchise and a license is the limitation set out in licensing agreements. Create flashcards for FREE and quiz yourself with an interactive flipper. Chapter 15 Licensing, Franchising, and Other Contractual Strategies 1) _____ 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. Country Comparatives Guides. Other Contractual Entry Strategies Chapter 15 Contractual Entry Strategies There are two common types of contractual entry strategies; 1. D. It's also easier for the company to extricate itself from the situation if the results aren't favorable. 1 Advantages and Disadvantages of Di erent Modes of Internationalization. Exporting, joint ventures, direct investment, licensing, franchising, and other forms of an alliance is duly considered as market entry types. 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. Options for CONTRACTS include co-marketing, R&D contracts, turnkey project, strategic supplier/distributor, licensing/franchising. Studying is made a lot easier and more fun with our online flashcards. 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. They provide dynamic, flexible choice. strategic alliances. 1. Licensing, Franchising, and Other Contractual Strategies Learning Objectives • Explain contractual entry strategies. The organization that gives the access is the licensor. accepting a franchise for dealing with the traditional products. - Governed by a CONTRACT that provides the focal firm a moderate level of control over the foreign partner - Typically involve exchange of INTANGIBLES (intellectual property) and services - Can be pursued independently or with other foreign market entry strategies, such as FDI and exporting Licensing and franchising both offer advantages for the involved parties: The licensee and franchisee both gain a competitive advantage in the market. Strategy 3: Franchising. The Franchiser maintains significant control of, or provides significant assistance to, the franchisee’s operation methods. 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. B) The franchisor holds much power, including superior bargaining power. 3. The strategy is to deter other firms’ entry into the market. Chapter 16- Licensing, Franchising, and Other Contractual Strategies Flashcards | Quizlet Chapter 16- Licensing, Franchising, and Other Contractual Strategies 5. docx - Chapter 15: Licensing. *Granting a right to use property to others. Study with Quizlet and memorize flashcards containing terms like Test Your Comprehension, 15-8. master franchise. Two common types of contractual entry strategies are licensing and franchising. Governed by : Contract law governs licensing. International Business Strategy, Management & the New Realities. Licensing is a contractual arrangement where a company grants permission to another party to use its intellectual property or brand. d. Leasing is especially beneficial to _____. An Industrial Design is Intended to _____ Question 2. 3 Describe the advantages and disadvantages of licensing. 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. Licensing is designed to reduce the risks involved in doing business for everyone involved. Ask AI New. 15. Contractual Entry Strategies. 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. Dispute settlement 4. 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. Discover. provides technical specifications to a subcontractor or local manufacturer. 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. 8 billion. 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. Licensing term can be defined as “The method of operating in other country wherein a Firm of one country agrees to permit a company in another country to use the manufacturing, Processing, Trademark & other skill provided by the Licensor”. docx from BUS 417 at Zayed University. 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. Revenues are usually more modest than with other entry strategies. Quiz 15: Licensing, Franchising, and Other Contractual Strategies. embargo, In the context of various strategies for reaching global markets, which of the following strategies. Exporting and Foreign Direct Investing are Two Common Types of Contractual. c. 15. Post termination issues. Staffing leverage . A franchise is a business model in which a business owner licenses their business to another individual or organization. The license has much stricter restrictions than the franchise. Learn faster with spaced repetition. Verified Answer for the question: [Solved] Which of the following is characteristic of exclusive licensing agreements? A) The licensor is not allowed to interfere with the production or marketing of the licensed asset. Disadvantages. Learn vocabulary, terms, and more with flashcards, games, and other study tools. 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. 15. Leasing is Especially Beneficial to _____ Question 80. They typically include the exchange of intangibles and services. 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. The organization that obtains the access is the licensee. 4. Multiple Choice . , Licensing is a contractual agreement whereby one company (the licensor) makes a legally protected asset available to another company (the licensee) in. firm can pursue individually or in conjunction with other entry strategies 4. From a licensee standpoint, there are fewer risks in product development, market testing, manufacturing, and distribution. CONTRACTUAL STRATEGIC ALLIANCES i. 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. make it difficult for later entrants to win business. Find Flashcards. A number of foreign market entry modes exist, including: exporting, licensing, franchising, joint venture and wholly owned subsidiary. Chapter 15: Licensing, Franchising, and Other Contractual Strategies Key Elements Contractual Entry strategies in. Homework Help. Posted by Rully Mangunsong at 10:16 AM. The principal advantages of international franchising are: (i) Franchising is a beneficial way to. 11 “Market Entry Options”). - contract provides focal firm with moderate level of control over foreign partner. Contractual Entry Strategies of Licensing and Franchising: 1. 1. A modern approach to international business. , patents, trademarks, copyrights) in exchange for a fee or royalty payment. • Franchising vs licensing – Licensing of IPRs is an element of franchising – Licensing of IPRs is the means to reach the end • Goals of franchising – For the franchisor: geographically expand its busi ness without taking financial risks – For the franchisee: benefit from the brand, experi ence and know-how of the franchisor FranchisingSTRATEGY AND OPPORTUNITY ASSESSMENT FOR INTERNATIONAL BUSINESS; 11. When the executives in charge of a firm decide to enter a new country, they must decide how to enter the country. trading bloc c. , Licensing Agreement, Copyright Licensing and more. Firms need to evaluate their options to choose the entry mode that best suits their strategy and goals. Study Licensing, franchising and other contractual strategies (Key Terms) flashcards from Lewis Mellor's class online, or in Brainscape's iPhone or Android app. True/False . Licensing, Franchising, and Other Contractual Strategies. and industry experts about instructions to franchise your business. -most often begun with export. 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. 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). Created by. 15. View MIB_8_MSLewandowska_2018_Fra. International Business: The New Realities, 5th Edition caters to a post-millennial student audience, the most diverse and educated generation to date. Question 74. BUS. Ch. Joint venture iii. Study with Quizlet and memorize flashcards containing terms like contractual entry strategies in international business, intellectual property, intellectual property rights and more. 4. Licensing, Franchising and other Contractual Strategies P a g e 1 | 10 P a g e 2 | 10 Executive Summary The report discusses international modes • Compared to licensing, franchising is usually a much more stable, long-term entry strategy. Quizlet flashcards, activities and games help you improve your grades. A) joint ventures B) licensing C) 100-percent ownership D) exporting E) franchising, 2) For Walt Disney. Can be pursued independently or in conjunction with other entry strategies. _____ these are the items owned by a franchisee that has the same monetary value. Devaluation decreases the value of currency in relation to other currencies. Chapter 16 – Licensing, Franchising, and Other Contractual Strategies I. 6. A) should bribe government officials to ensure protection of intellectual property B) should register patents and copyrights with local governments C) should keep information about intellectual property confidential from all franchisees in. In 1974 the company started franchising in the USA and later it was uses in order to expand globally. 4. A. 15. Low control, low local knowledge, potential negative environmental impact of transportation. Our clients are winning for franchising. Franchising 5. Markman et al. The license agreement permits the use of trademarks, nothing more. CHAPTER 15 LICENSING FRANCHISING AND. AFM 333 – Ch 16 Licensing, Franchising, and Other Contractual Strategies. Abstract. cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an explicit contract intellectual property ideas or works created by individuals or firms, including discoveries and inventions; artistic, musical, and literary works; and words, phrases, symbols, and designs They are governed by a contract that provides the focal firm with moderate level of control over the foreign partner They typically include the exchange of intangibles and services Firms can pursue them independently or in conjunction with other entry strategies They provide dynamic, flexible choice They often reduce local perceptions of the. a. 13 8. Franchising is another variation of licensing strategy. Two common types of contractual entry strategies are licensing and franchising. Royalties. The five most common methods include exporting, licensing and franchising, partnering and strategic alliance, acquisition, and Greenfield venture. If you want to have more autonomy in business decisions with the freedom to make your own vision. First, mature products in a domestic market might find new growth opportunities overseas. Licensing and franchising share a few similar advantages. Patent licensing is one of the most expensive licensing. export restraint b. 5. The main difference between the two is the duration of the commitment involved. Direct exporting is often considered the default choice for new market entry. 3. 1 International-Expansion Entry Modes. Which of the Following is Provided by the Licensor in a Licensing. Default and termination 3. Exporting and foreign direct investing are two common types of contractual entry strategies. C) use of a well-known, recognizable brand name D) The franchisee holds much power,. 2. University University of. Study with Quizlet and memorize flashcards containing terms like Contractual Entry Strategies in International Business, Intellectual property, Intellectual Property Rights and more. 4 illustrates the nature of the franchising agreement A typical. cross border interaction between focal firm and foreign firm governed by a contract. Exhibit 15. 1. One of the key differences between a franchise and a license is the limitation set out in licensing agreements. Terms: a. On the other hand, franchise agreements allow the use of trademarks, additional intellectual. In addition to paying an. 2. Indirect strategies are indirect/direct exporting, licensing, franchising and contractual agreements (see Table 2). Learn. [2] defined market entry as "a planned move into a new or adjacent market for the creation and delivery of offerings. Key Challenges Faced by the Franchisee is the Decreased Likelihood. Global Marketing Strategy for. Fast entry, low risk. Licensing, on the other hand, is a form of private contract between parties and. True or false: Transportation costs would have an effect on which entry mode a company uses. View BUS 417 . includes exchange of intangibles and services 3. Uploaded By ebrarpatriot. docx from BUS MISC at Florida State University. 2 Understand licensing as an entry strategy. Franchising is an arrangement in which the. 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. Cavusgil, 3edition, Licensing Franchising and Other Contractual Strategies, Licensing, Franchising, Franchise, Chapter16. Test. 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. Risk in franchising. 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. S. Patents provide inventors the right to prevent another person or company from selling or using an invention for up. Two Types of Contractual Relationships. Licensing is a legal process in which one firm pays to use or distribute another firm's resources. Test.