Which of the Following Is NOT a Potential Disadvantage of Licensing

question 52

Multiple Choice

Which of the following is NOT a potential disadvantage of licensing relative to FDI?

• A) possible loss of quality control
• B) establishment of a potential competitor in third-country markets
• C) possible improvement of the technology by the local licensee, which then enters the original firm's home market
• D) All of the above are potential disadvantages to licensing.

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Definitions:

Financial Liability

An obligation that requires the entity to transfer economic benefits including money, goods, or services to another entity as a result of past transactions or events.

Convertible Debt

A type of bond or other form of debt that can be converted into a specified number of shares of the issuing company's stock at certain times during its life.

GAAP

Generally Accepted Accounting Principles, a set of accounting standards, principles, and procedures that companies must follow when compiling their financial statements.

APB

The Accounting Principles Board, which was an organization that set standards for financial reporting and accounting in the past, succeeded by the FASB.