alleryStart learning →What is licensing in international business?
AA government permit allowing a firm to import goods
BA firm letting another firm use its proprietary knowledge for a fee
CA firm buying part of a foreign company to enter a market
DA firm shipping its own goods to buyers in another country
Answer & Solution
Correct answer: B. A firm letting another firm use its proprietary knowledge for a fee
1. Licensing is a legal process between two firms.
2. The licensor agrees to let the licensee use a manufacturing process, trademark, patent or trade secret.
3. The licensee agrees to pay the licensor a royalty or fee agreed by both parties.
4. It lets a firm move into the global arena with relatively little risk.
5. Buying part of a foreign company is a joint venture and shipping goods abroad is exporting.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 3 "Competing in the Global Marketplace", section 3.6 Participating in the Global Marketplace_
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