Which of the following is true of licensing?
A) Licensing is used when a firm possesses some tangible property but does not want to pursue a potential application itself.
B) The firm does not have to bear the development costs and risks associated with opening a foreign market.
C) It is an attractive option when a firm is interested in pursuing a foreign market and is ready to commit substantial resources to a foreign market.
D) It is an attractive option for firms that have the capital to open overseas markets.

Question

Quizplus · Accepted Answer

A licensing agreement is an arrangement whereby a licensor grants the rights to intangible property to another entity for a specified period in exchange for royalties.
The primary advantage of licensing is that the firm does not have to bear the development costs and risks associated with opening a foreign market. As a result, licensing is a very attractive option for firms that lack the capital to open overseas markets. Licensing is also an attractive option when a firm is interested in pursuing a foreign market but does not want to commit substantial resources to an unfamiliar or potentially volatile foreign market. Licensing is also used when a firm wishes to participate in a foreign market, but is prohibited from doing so by barriers to investment. Finally, licensing is used when a firm possesses some intangible property but does not want to pursue a potential application itself.

Which of the Following Is True of Licensing