Comprehensive Guide to MAN3600 Exam 4 –
Licensing, Franchising, and Global
Expansion|Verified Questions Complete with
A+ Graded Rationales Latest Updated 2026
Licensing
when a firm permits another to use its intellectual property for compensation designated as
royalty (payment). Usually an agreement between a licensor and a licensee.
Licensed property may include...
patents, trademarks, copyrights, technology, technical know-how, specific business skills.
Benefits of licensing
-does not require capital investment or involvement with foreign customers.
-capitalizes on research and development already conducted.
-helps avoid host country regulations applicable to equity ventures.
Costs of licensing
-very limited form of foreign market participation.
-doesn't guarantee a basis for future expansion.
-licensor may create its own competitor!
ex: Zenith gave LG and Samsung licenses, Zenith got pushed out of market.
Franchising
the granting of the right by a parent company to another independent entity to do business in
a prescribed manner. Franchising is more structured and better prescribed than licensing.
In order to be successful in franchising...
the firm must offer unique products/propositions, and a high degree of standardization.
Major forms of franchising
manufacturer-retailer (car dealerships)
manufacturer-wholesaler (soft drink companies)
service-firm retailer (fast food restaurants)
Why do firms want to franchise?
, financial gain, market potential, and saturated domestic markets.
Strategic Alliance
an arrangement between two or more companies with a common business objective.
Business form this agreement with suppliers, consumers, competitors, and companies in
other industries in order to better compete.
Reasons for inter-firm cooperation:
market development, to share risks/resources, to block co-opt competitors.
Contractual Agreements
strategic alliance partners may join forces for R&D, marketing, production, licensing, cross-
licensing, cross-market activities, or outsourcing (NO EQUITY).
Contract Manufacturing
allows corporations to separate the physical production of goods from the R&D and
marketplace (Apple).
Management Contracts
involve selling one's expertise in running a company while avoiding the risk or benefit of
ownership (management skills).
Turnkey Operation
contractual agreement permitting a client to acquire a complete system following its
completion (everything is taken care of).
Equity Participation
some companies have acquired minority ownerships in companies that have strategic
importance for them (ex: Apple & emerging technologies) (SOME EQUITY).
Reasons for equity participation:
ensures supplier ability, builds working relationships, creates market entry/support of global
operations.
Joint Ventures
involves participation of two or more companies in an enterprise in which each party
contributes assets, has some equity, and shares risk (CREATES A NEW ENTITY/COMPANY).
Reasons for establishing a joint venture:
Licensing, Franchising, and Global
Expansion|Verified Questions Complete with
A+ Graded Rationales Latest Updated 2026
Licensing
when a firm permits another to use its intellectual property for compensation designated as
royalty (payment). Usually an agreement between a licensor and a licensee.
Licensed property may include...
patents, trademarks, copyrights, technology, technical know-how, specific business skills.
Benefits of licensing
-does not require capital investment or involvement with foreign customers.
-capitalizes on research and development already conducted.
-helps avoid host country regulations applicable to equity ventures.
Costs of licensing
-very limited form of foreign market participation.
-doesn't guarantee a basis for future expansion.
-licensor may create its own competitor!
ex: Zenith gave LG and Samsung licenses, Zenith got pushed out of market.
Franchising
the granting of the right by a parent company to another independent entity to do business in
a prescribed manner. Franchising is more structured and better prescribed than licensing.
In order to be successful in franchising...
the firm must offer unique products/propositions, and a high degree of standardization.
Major forms of franchising
manufacturer-retailer (car dealerships)
manufacturer-wholesaler (soft drink companies)
service-firm retailer (fast food restaurants)
Why do firms want to franchise?
, financial gain, market potential, and saturated domestic markets.
Strategic Alliance
an arrangement between two or more companies with a common business objective.
Business form this agreement with suppliers, consumers, competitors, and companies in
other industries in order to better compete.
Reasons for inter-firm cooperation:
market development, to share risks/resources, to block co-opt competitors.
Contractual Agreements
strategic alliance partners may join forces for R&D, marketing, production, licensing, cross-
licensing, cross-market activities, or outsourcing (NO EQUITY).
Contract Manufacturing
allows corporations to separate the physical production of goods from the R&D and
marketplace (Apple).
Management Contracts
involve selling one's expertise in running a company while avoiding the risk or benefit of
ownership (management skills).
Turnkey Operation
contractual agreement permitting a client to acquire a complete system following its
completion (everything is taken care of).
Equity Participation
some companies have acquired minority ownerships in companies that have strategic
importance for them (ex: Apple & emerging technologies) (SOME EQUITY).
Reasons for equity participation:
ensures supplier ability, builds working relationships, creates market entry/support of global
operations.
Joint Ventures
involves participation of two or more companies in an enterprise in which each party
contributes assets, has some equity, and shares risk (CREATES A NEW ENTITY/COMPANY).
Reasons for establishing a joint venture:
