Super Cola (Scenario) U.S.-Based Super Cola, One of the Top Five Cola Manufacturers

question 64

Multiple Choice

Super Cola (Scenario)
U.S.-based Super Cola, one of the top five cola manufacturers, has previously attempted to enter the Asian beverage market with little success. Lacking the name recognition of its competitors, Super Cola was unable to gain market share and ceased shipping its products overseas after six months. Super Cola realizes that the large Asian market would be extremely profitable, but the company requires a new strategy. Consultants hired by Super Cola propose two different methods for entering the market: licensing and franchising.
-Which of the following primary benefits is Super Cola most likely to accrue by virtue of entering into a licensing agreement with Tsang Cola?

• A) Super Cola would learn the marketing techniques used by cola manufacturers in Asia and would simulate them after the expiry of the licensing agreement with Tsang Cola.
• B) Super Cola would be represented on the Tsang board of directors and would oversee Tsang operations in Asia and the U.S.
• C) Super Cola would learn the manufacturing techniques used by Tsang Cola and use the same methods in the U.S.
• D) Super Cola would receive royalties from beverage sales and an entry into the Asian market.

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Definitions:

Absolute Advantage

The ability of an individual, company, or country to produce a good or service more efficiently than its competitors with the same amount of resources.

World Production

encompasses the total output of goods and services by all economies across the globe over a specific period.

Self-Sufficient

The ability to fulfill all of one's needs without relying on external assistance.

Comparative Advantage

The ability of a country, individual, company, or region to produce a particular good or service at a lower opportunity cost than others.