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.

---

Definitions:

Layoff Cost

The financial impact associated with reducing a company's workforce, including severance pay, unemployment benefits, and potential legal costs.

Hiring And Training Cost

Expenses associated with recruiting new employees and providing them with the necessary training to perform their job.

Labor Hours

The total number of hours worked by employees during a certain period, often used to measure productivity.

Inventory Holding Cost

Inventory holding cost refers to the total expenses associated with storing unsold goods, including warehousing, insurance, depreciation, spoilage, and opportunity costs.