Which of the Following Is NOT a Potential Disadvantage of Licensing

question 52

Multiple Choice

Which of the following is NOT a potential disadvantage of licensing relative to FDI?

• A) possible loss of quality control
• B) establishment of a potential competitor in third-country markets
• C) possible improvement of the technology by the local licensee, which then enters the original firm's home market
• D) All of the above are potential disadvantages to licensing.

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Definitions:

Society

A group of individuals living together in a more or less ordered community, sharing customs, laws, and organizations.

Opportunity Cost

The cost of foregoing the next most desirable choice when a decision is made.

Out-of-pocket Cost

Direct payments made by individuals for goods or services, not reimbursed by insurance or other means.

Marginal Cost

Marginal Cost is the cost incurred by producing one more unit of a product or service.