According to Internalization Theory, One of the Drawbacks of Licensing

question 5

Multiple Choice

According to internalization theory, one of the drawbacks of licensing is that

• A) it may result in a firm's technological know-how being restricted to a limited knowledge base and stifles any future development.
• B) it does not give a firm the tight control over manufacturing, marketing, and strategy in a foreign country that may be required to maximize its profitability.
• C) when a firm allows another enterprise to produce its products under license, the licensee bears the costs or risks.
• D) its use is restricted by the government through the imposition of tariffs and quotas.
• E) it is less cost-effective than FDI.

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Definitions:

Smokers

Individuals who habitually inhale smoke from substances such as tobacco, often leading to dependence and health risks.

Quit

To stop or discontinue an action or habit, often referring to the cessation of harmful behaviors like smoking.

Abstinence Violation Effect

A psychological phenomenon where a person who has committed to abstaining from a certain behavior, such as drug use or overeating, perceives a lapse as a major failure, which may lead to continued behavior.

Ex-smokers

Individuals who have quit smoking and no longer use tobacco products.