Author Question: Licensing, franchising, and management contracts are all forms of international business activity. ... (Read 109 times)

newbem · **on:** Jul 7, 2018

Licensing, franchising, and management contracts are all forms of international business activity. Using examples, briefly define each form. What are the advantages and disadvantages of using these forms of activity?

What will be an ideal response?

Question 2

A(n) ________ calls for a firm to concentrate its organizational control system on the actual mechanics the firm uses to develop strategic plans.

A) responsibility center control
B) generic organizational control
C) planning process control
D) operations control

mfedorka · **Reply #1 on:** Jul 7, 2018

Answer to Question 1

Licensing is a contractual arrangement in which a firm in one country licenses the use of its intellectual property to a firm in a second country in exchange for royalty payments. Licensing occurs when Walt Disney allows a foreign company to use the Mickey Mouse image on clothing. Franchising is a specialized form of licensing. It occurs when a firm in one country authorizes a firm in a second country to utilize its operating system as well as its intellectual property in exchange for payments. McDonald's authorizes franchises around the globe. Management contracts involve an arrangement wherein a firm in one country operates facilities or provides other management services to a firm in another country for a fee. Hilton and Marriott utilize management contracts to operate overseas hotel properties. Each firm allows a company to earn fees for its assets (intellectual property, operating systems, and management services) while allowing another firm access to those assets. However, each allows the potential to create competition in another country by providing access to those assets.

Answer to Question 2

C