Which of the Following Is a Disadvantage of Licensing

question 2

Multiple Choice

Which of the following is a disadvantage of licensing?

• A) It does not help firms that lack capital to develop operations overseas.
• B) It does not give a firm the tight control over strategy that is required for realizing experience curve and location economies.
• C) It cannot be used when a firm possesses some intangible property that might have business applications.
• D) The firm has to bear the development costs and risks associated with opening a foreign market.

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the individual data points differ from the mean.

Expected Rate

The anticipated return on an investment, factoring in the probability of various outcomes, including risks and rewards.

T-bill

Short for Treasury bill, a short-term government security issued at a discount from the par value and pays no interest before maturity, but is redeemed at its face value.

Correlation Coefficient

A numerical measure that describes the size and direction of a relationship between two variables.