GeNext, a Leading Mobile Software Developer in Japan, Agrees to Develop

question 56

Multiple Choice

GeNext, a leading mobile software developer in Japan, agrees to develop exclusive software application programs for a new line of affordable smartphones to be launched by CelCom, a smartphone manufacturer in China. The brand reputation and pricing strategies of both of these companies are expected to bring in large volumes of smartphone sales. The profits from the sales will be divided between these two firms. In the given scenario, GeNext and CelCom have _____.

• A) entered into a licensing agreement
• B) formed a strategic alliance
• C) entered into an agreement for a merger
• D) made a direct foreign investment

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Definitions:

EBIT

Stands for Earnings Before Interest and Taxes, a measure of a firm's profitability that excludes interest and income tax expenses.

Cost of Goods Sold

The immediate financial outlays involved in the manufacture of goods a company sells, such as labor and material expenses.

Price-Earnings Ratio

A valuation metric that compares a company's share price to its earnings per share.