Which of the following is a disadvantage of the international business strategy of licensing?
A) It subjects the original firm to high transportation expenses.
B) The profits of a firm using this strategy are limited to those it receives from royalty payments.
C) It allows a firm to enter a foreign market in high-risk conditions.
D) The costs of licensing are quite high and must be borne solely by the original firm.

Question

Quizplus · Accepted Answer

Licensing involves a firm granting the rights to its technology, brand, or product specifications to another firm in a foreign market in exchange for a fee or royalty. This means the original firm's profits from that market are limited to the royalties received, which can be significantly less than the profits that could be earned from direct operations or sales in that market.

Which of the Following Is a Disadvantage of the International