Hewlett-Packard Licenses Some of Its Intellectual Property Through Strategic Alliances

question 125

Multiple Choice

Hewlett-Packard licenses some of its intellectual property through strategic alliances. Which of the following is correct about this relationship?

• A)This is a joint venture because in licensing arrangements, a new company is created.
• B)This is an equity strategic alliance because licensing does not involve the creation of a new company, but does involve an equity commitment.
• C)The firms risk charges of collusion because most licensing relationships between competitors involve explicit collusion.
• D)This is a nonequity strategic alliance with Hewlett-Packard leveraging its unique capabilities.

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Definitions:

Salvage Value

The projected sales value of an asset at the termination of its effective life.

Financially Attractive

Describes opportunities or investments that are likely to provide a good return or prove to be profitable.

Discount Rate

The discount rate applied in DCF analysis to calculate the current value of future cash streams.

Total-Cost Approach

A pricing strategy that accounts for all possible costs incurred to bring a product to market, including production, marketing, and distribution costs.