Gibson Electronics Identifies Licensees in Various Countries Who Produce and Sell

question 61

Multiple Choice

Gibson Electronics identifies licensees in various countries who produce and sell the company's products in their countries in return for a royalty fee on every unit sold. Gibson Electronics' approach is risky because of the problems associated with

• A) sharing valuable technological know-how with a potential competitor.
• B) an increase in transportation costs, especially for those products that have a low value-to-weight ratio.
• C) doing business in a different culture where the rules of the game may be very different.
• D) the possibility of an increase in trade barriers such as import tariffs or quotas.
• E) increased production costs.

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Definitions:

Effective

Having the intended or expected result or coming into force.

Writing

Writing refers to the recording of characters on a medium, enabling communication or documentation across time and space.

State Supreme Court

The highest judicial court in a U.S. state, responsible for interpreting state laws and constitutions.

Illegal

Actions or activities that are prohibited by law and subject to sanctions.