MAN3600 ch.16

________ is an arrangement in which the focal firm or a consortium of firms plans, finances, organizes, manages, and implements all phases of a project abroad and then hands it over to a foreign customer after training local workers.

Turnkey contracting

Where are the majority of the world's top licensing firms based?

U.S.

Which of the following countries is home to the largest number of franchisors?

U.S.

Which of the following statements is true about international franchisors?

Franchisees may use franchise knowledge to start a competing business.

Which of the following is an example of intellectual property?

Volkswagen's logo

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was created by the ________.

WTO

________ is an arrangement in which a contractor supplies managerial know-how to operate a hotel, hospital, airport, or other facility in exchange for compensation.

Management contract

Which of the following is characteristic of cross-border contractual relationships?

When compared to FDI, they are less susceptible to volatility and risk, and tend to bring both parties a predictable stream of revenue.

Leasing is especially beneficial to ________.

developing economies

Which of the following makes it difficult to completely duplicate a food franchise in every global market?

different local ingredients

In a system franchising agreement, the franchisee provides ________.

down-payment plus royalty

An advantage of licensing is that firms are able to ________.

enter markets with extensive trade barriers

By establishing a brand name and market power through a licensing agreement, licensors are able to ________.

establish a more durable presence in the local market

When a firm allows others to use an entire business system in exchange for compensation, the arrangement is known as ________.

franchising

An industrial design is intended to ________.

improve a product's performance and marketability

Information technology has increased the success and growth of international franchising operations by ________.

improving communication between MNE managers and their franchisees

In a system franchising agreement, the franchisor provides ________.

production and marketing methods

________ is a fee paid periodically to compensate a licensor for the temporary use of its intellectual property, often based on a percentage of gross sales generated from the use of the licensed asset.

royalty

Which of the following is characteristic of master franchise arrangements?

subfranchises to other independent businesses and thus assumes the role of the local franchisor

Which of the following is protected under copyright laws?

the art of Jackson Pollack

Host-country governments often encourage franchising because most of the money generated by the franchise remains in the local economy.

true

In a master franchising agreement, the master franchisee has the right to subfranchise to other independent businesses and thus assume the role of the local franchisor.

true

In international leasing, a major advantage for the lessor is the ability to gain quick access to target markets, while putting assets to use earning profits.

true

In typical licensing agreements, the licensee compensates the licensor with a down-payment plus ongoing royalties based on sales.

true

Infringement of intellectual property is the unauthorized use or reproduction of products and services protected by a patent, copyright, trademark, or other intellectual property right.

true

Licensing agreements enable energy and defense firms to enter nations that restrict the foreign ownership of businesses related to national security.

true

Licensing and franchising are complex undertakings and require skillful research, planning, and execution.

true

Patents provide inventors the right to prevent another person or company from selling or using an invention for up to twenty years.

true

Turnkey contracting is an arrangement in which the focal firm or a consortium of firms plans, finances, organizes, manages, and implements all phases of a project abroad and then hands it over to a foreign customer after training local workers.

true

Under a build-operate-transfer (BOT) arrangement, a firm or consortium of firms contracts to build a major facility abroad and then transfers ownership to the project sponsor, typically the host-country government or public utility.

true

Where counterfeiting and piracy are commonplace, companies are reluctant to invent, innovate, and market legitimate products, which reduces consumer choices and ultimately lowers living standards.

true

A collective mark ________.

is a logo belonging to an organization whose members use it to identify themselves and associate their products with a level of quality or accuracy, geographical origin, or other positive characteristic

Which of the following is an example of trademark licensing agreement?

a U.K.-based cosmetics manufacturer that is allowed to use an American cosmetics manufacturing firm's logo for its new line of "Titanium" makeup products

In a licensing agreement, the licensee provides ________.

a combination of down-payment plus royalty

Which of the following is provided by the licensor in a licensing agreement?

a combination of intellectual property and technical information and assistance

To minimize the complexity of franchising, focal firms must ________.

conduct advance research on the host country's laws on intellectual property

Which of the following is an example of franchising?

A U.S-based quick-service restaurant gives rights to another business to use its entire business system in exchange for compensation and royalties

Which of the following is true about cross-border contractual relationship?

A local firm allows the focal firm to blend into the local market, attracting less attention.

Which of the following statements is true of leasing?

A major advantage for the focal firm is the ability to gain quick access to target markets, while putting assets to use in earning profits.

Which of the following most likely supports an ACC decision to not enter a licensing agreement with the Chinese firm?

ACC wants to maintain firm control of how the Wonder Cat character is used.

Which of the following is an example of licensing?

An American electronics firm has given the right to a new process for manufacturing e-book readers to an electronics manufacturer in Canada.

Which of the following most likely supports Azoo government's decision to award the project bid to Contractor A?

Azoo leaders want immediate ownership of the public projects.

Which of the following questions would be more important to evaluate before ACC enters a licensing agreement with the Chinese firm?

How much control will ACC be able to maintain over the use of the Wonder Cat brand?

Which of the following statements most likely supports BBB legal experts fully investigating the intellectual property laws of each nation in which BBB has franchises?)

Intellectual property laws and its enforcement varies from country to country

Which of the following questions would be more important for the experts to evaluate when determining how to ensure intellectual property protection for Big Boy Burgers?

Is BBB partnering with ethical franchisees that have no intention of becoming BBB competitors in the future?

Which of the following statements is true of infringement of intellectual property?

It amounts to piracy and takes the form of production and distribution of counterfeit goods.

Which of the following is a disadvantage of licensing for technological firms?

It increases the risk of creating a future competitor.

Which of the following is an advantage of franchising to the franchisor?

It is a low-risk, low-cost entry strategy.

Which of the following is an advantage of licensing?

It requires very little capital investment in the foreign market

Which of the following is true about franchising as an entry strategy?

It restricts a firm's ability to expand more rapidly abroad.

Which of the following statements most likely supports an ACC decision to enter into a licensing agreement with the Chinese firm?

The Chinese government restricts complete ownership of local operations by foreign firms

Which of the following challenges is applicable to the franchisee in a franchising agreement?

The franchisor holds much power, including superior bargaining power

Which of the following is characteristic of exclusive licensing agreements?

The licensee is prohibited from sharing the licensed asset with another company within a specified region.

A cross-border contractual relationship provides the focal firm with ________ over the foreign partner.

a moderate level of control

Professional service firms, such as PriceWaterhouseCooper, often enter large international markets through FDI but usually use ________ to enter small markets.

affiliates

The purpose of intellectual property rights is to ________.

allow inventors monopoly advantage for a specified period of time

Cross-licensing often occurs in the semiconductor and chemical industries in order to

avoid research duplication and building on each other's innovations

Contractor B proposes a build-operate-transfer arrangement. The government of Azoo might select Contractor B in order to ________.

build the projects cost-effectively

Which of the following is characteristic of a know-how agreement?

exchanging technological or management information for royalties

A know-how agreement grants a firm permission to use another firm's proprietary names, characters, or logos for a specified period of time in exchange for a royalty.

false

A patent exclusively refers to a distinctive design, symbol, logo, word, or series of words placed on a product label.

false

An arrangement in which a contractor supplies managerial know-how to operate a hotel, hospital, airport, or other facility in exchange for compensation is known as offshoring.

false

An industrial design is a logo belonging to an organization whose members use it to identify themselves and associate their products with a level of quality.

false

Excluding noncompete clauses in employee contracts help prevent employees from serving competitors for some years after leaving the firm.

false

Exporting and foreign direct investing are two common types of contractual entry strategies.

false

In a franchising agreement, the franchisee provides training, ongoing support, and the right to participate in cooperative marketing programs, to the franchisor.

false

In a licensing agreement, the licensee is both the owner and user of intellectual property.

false

In a typical licensing agreement, after the relationship is established, the licensor is required to be directly involved in the market and provide ongoing managerial guidance.

false

Key challenges faced by the franchisee is the decreased likelihood of operating an independent business.

false

Laws that govern contractual obligations are uniform across countries, therefore, it makes contract enforcement abroad easier for firms.

false

One of the advantages for the franchisor is that is it easier to maintain control over the franchisee.

false

One of the advantages of licensing is that the profits generated from such agreements are typically higher than for FDI.

false

One of the disadvantages of licensing is that it requires the licensor to make a high capital investment in the foreign market.

false

Treaties that support international protection of intellectual property harm developing economies due to high capital investment.

false

When compared to licensing agreements, the relationships established in franchising arrangements are typically volatile and short-term.

false

When consumers buy counterfeit goods, payments accrue to the firm that invented the product and not to illicit enterprises.

false

Which of the following is NOT provided by the licensor?

ongoing managerial guidance

Contractor A proposes a turnkey contract for Azoo. Contractor A would most likely oversee each of the following EXCEPT ________.

operating the subway system continuously

Which of the following is an essential method used by a focal firm to protect its intellectual property in a foreign country?

password-based security systems

Before undertaking contractual entry strategies abroad, management ________.

should register patents and copyrights with local governments

In a licensing agreement, ________ is responsible for local sales.

the licensee

The greatest amount of licensing occurs in the ________ industries.

toy

Contractual entry strategies in international business are cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed by an explicit contract.

true

Franchising is an advanced form of licensing in which the the franchisor allows the franchisee, the right to use an entire business system in exchange for compensation.

true

Which of the following is an advantage of franchising to the franchisee?

use of a well-known, recognizable brand name

The reputation of a licensor will be jeopardized by a licensing agreement if the licensee ________.

uses the licensing asset to create products of poor quality