Define licensing, cite its advantages and disadvantages, and explain what franchising is.
What will be an ideal response?
Licensing offers the right to a company trademark, patent, trade secret, or other similarly valued items of intellectual property in return for a royalty or a fee. The advantages to the company granting the license are low risk and a capital-free entry into a foreign country. The licensee gains information that allows it to start with a competitive advantage and the foreign country gains employment by having the product manufactured locally. However, the licensor forgoes control of its product and reduces the potential profits gained from it. The licensor may be creating its own competition. To offset this disadvantage, many companies strive to stay innovative so that the licensee remains dependent on them. Additionally, should the licensee prove to be a poor choice, the name or reputation of the company may be harmed. Franchises include soft drink, motel, retailing, fast food, and car rental operations, and a variety of business services. Two variations of licensing, contract manufacturing and contract assembly, represent alternative ways to produce a product within the foreign country. With contract manufacturing, a U.S. company may contract with a foreign firm to manufacture products according to stated specifications. The product is then sold in the foreign country or exported back to the United States. With contract assembly, the U.S. company may contract with a foreign firm to assemble (not manufacture) parts and components that have been shipped to that country. In both cases, the advantage to the foreign country is the employment of its people, and the U.S. firm benefits from the lower wage rates in the foreign country. This practice has been an economic boon to Taiwan where 55 percent of the world's notebook computers are made. A third variation of licensing is franchising, which is a contractual arrangement between a parent company (a franchisor like McDonald's) and an individual or firm (a franchisee) that allows the franchisee to operate business under an established name and according to specific rules.
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At the beginning of the fiscal year, office supplies inventory amounted to $600 . During the year, office supplies amounting to $8,800 were purchased. This amount was debited to office supplies expense. An inventory of office supplies at the end of the fiscal year showed $400 of supplies remaining. The beginning of the year balance is still reflected in the office supplies inventory account. What
is the required amount of the adjustment to the office supplies expense account? a. $9,000 debit b. $200 debit c. $8,400 credit d. $8,800 credit
A manager is faced with having to lay off some of his staff due to financial losses that the company has suffered. Which of the following channels of communication would be the LEAST effective method for sharing the news with employees, given the sensitive nature of the message?
a. A face-to-face meeting with each employee b. A well-written, empathetic letter to each affected employee c. A telephone call to each affected employee d. Electronic mail to all affected employees
_______________________ defines ethical actions as those that maximize aggregate welfare.
Fill in the blank(s) with the appropriate word(s).
Amy just took a job with a scrap metal collection company. Her job is to search for potential customers that need to get rid of scrap metal or those customers who wish to buy scrap metal. Amy's job fits into the first step of the personal-selling process, that ofÂ
A. gaining commitment. B. pre-approach. C. prospecting. D. advertising. E. sales promotion.