In the Context of a Company Entering a Foreign Market

question 60

Multiple Choice

In the context of a company entering a foreign market, identify a difference between licensing and wholly owned subsidiaries.

• A) Licensing is an equity mode of entering a foreign market, whereas wholly owned subsidiaries refer to a nonequity mode of entering a foreign market.
• B) Licensing possesses high risk, whereas wholly owned subsidiaries are subjected to low risk.
• C) Licensing protects intellectual property, whereas wholly owned subsidiaries are prone to losing their intellectual property.
• D) Licensing creates distance from customers, whereas wholly owned subsidiaries provide direct exposure to local customers.

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Definitions:

Constant Cash Outflow

A fixed amount of money paid out by a company at regular intervals, typically for operating expenses or loan repayments.

Fixed Cost

Fixed costs are business expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.