In Which of the Following Situations Does the Internalization Theory

question 25

Multiple Choice

In which of the following situations does the internalization theory recommend FDI as opposed to licensing?

• A) When the firm has know-how that can be adequately protected by a licensing contract
• B) When the firm produces products that have a low value-to-weight ratio
• C) When a firm's skills and know-how are amenable to licensing
• D) When the firm needs tight control over a foreign entity

---

Definitions:

Tall Structures

Organizational hierarchy models characterized by multiple layers of management, resulting in longer communication paths and potential delays in decision-making.

Narrow Spans of Control

A managerial structure in which a manager oversees a small number of subordinates, allowing for more direct supervision and communication.

Management Levels

The different layers of management in an organization, typically categorized into top-level (executives), middle-level (managers), and lower-level (supervisors or team leaders).

Environmental Uncertainty

The degree to which an organization lacks information about its external environment, making it difficult to predict future trends or events.