Which of the following is true about emerging market economies in ...

[Charlie]

Which of the following is true about emerging market economies in international business?
 
  A) They account for nearly two-thirds of world GDP and host the world's largest MNEs.
  B) They have tremendous purchasing power with minimal restrictions on international trade and investment.
  C) These markets have evolved from manufacturing economies to service-based economies.
  D) Businesses in emerging markets are important targets for machinery, equipment, and technology sales.

Question 2

What is cross-licensing? Why does the pharmaceutical industry tend to favor cross-licensing arrangements? Explain your answer in a short essay.
 
  What will be an ideal response?

[Dunkey]

Answer to Question 1

D

Answer to Question 2

In some industries, such as pharmaceuticals, chemicals, and semiconductors, technology is acquired in reciprocal licensing arrangements among firms from the same or similar industries. This is known as cross-licensing. In industries where the rate of technological advances is rapid and where innovations often build on each other, technology licensing from competitors provides key advantages. It reduces the costs of innovation by avoiding duplication of research, while reducing the risk of excluding any one firm from access to new developments. The pharmaceutical industry tends to use cross-licensing agreements because R&D to develop a new drug can cost billions of dollars, and new drugs require long government approval processes, pharmaceutical firms want to launch their discoveries as quickly as possible. To reduce costs and increase the speed of new drug development, pharmaceutical firms license inventions to each other.