According to Internalization Theory,licensing Has Three Major Drawbacks as a Strategy

question 73

Multiple Choice

According to internalization theory,licensing has three major drawbacks as a strategy for exploiting foreign market opportunities.Each of the following is a drawback of licensing except:

• A) licensing may result in a firm's giving away valuable technological know-how to a potential foreign competitor.
• B) licensing 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) licensing helps a firm avoid making a direct foreign investment in a foreign country.
• D) when a firm's competitive advantage is based not so much on its products as on the management, marketing, and manufacturing capabilities that produce those produces, licensing fails to capture those advantages.
• E) none of these answers is correct.

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Definitions:

Earnings Per Share

A financial metric indicating the portion of a company's profit allocated to each outstanding share of common stock.

Market Price

The existing price for purchasing or selling an asset or service.

Investment

The allocation of resources, usually money, in the expectation of generating an income or profit.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares, rather than cash.