Answer to Question #239753 in Marketing for Maxx

Question #239753

1. A foreign market entry strategy is appropriate when knowledge is well codified.

Advantage of licensing

2. Low initial investment

3. Access to local knowledge

Disadvantage of licensing

4. Potential for creating a competitor

5. License contract should include product and territorial coverage, length of the contract, quality control, grant back and cross-licensing, royalty rate and structure, choice of currency, and choice of law.

6. Also known as outsourcing. Contract Manufacturing

Advantage of Franchising

7. Overseas expansion with a minimum investment

Disadvantage of Franchising

8. Revenues may not be adequate

9. Cultural problems

Advantage of Outsourcing

10. Lower political and economic risk

Expert's answer


The statement is true to access foreign markets and to generate new business ideas. 


Advantage of licensing 

2. Low initial investment- there are lower capital requirements 

3. Access to local knowledge- by reaching out to new markets. 


Disadvantage of licensing

4. Potential for creating a competitor- by including potential risks and licensing out one’s products.


5. It also needs to include a time plan of 1-1/2 to 2 years period. 


Outsourcing or contract manufacturing is a contract in which one firm hires another firm to be accountable for a deliberate or current activity that is or could be completed within the firm, and it involves relocating assets and employees from one company to another.


Franchising has the advantage of overseas expansion with minimum investment since it reduces risk to a larger extent.


Disadvantage of Franchising

8. Revenues may not be adequate- since it is not suitable for every business 

9. Cultural problems- Federal and state regulations may hinder the development of a business. 


It evades the need to hire individuals in‐house; henceforth recruitment and operational costs can be minimized to a great extent while saving on time.


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