Question

Licensing is one of the ways of entering of foreign market without ______.

Options

• Capital requirement

• Strategic alliances

• Setting up wholly owned subsidiary in host country

• All of the above

Answer 1

Licensing is one of the ways of entering of foreign market without capital requirement.

Explanation:

Licensing is a method of accessing overseas markets in which a corporation (licensor) offers a foreign company (licensee) permission to manufacture and sell its products or use its intellectual property in exchange for royalty fees.

• It does not require a big capital investment because the licensee handles the production and marketing costs.
• It also does not require establishing a completely owned subsidiary or creating strategic alliances, making it a low-cost and low-risk way of global expansion.