Question

10

Mark X if True                                                                                                                 _____Environmental Forces include both Internal and External forces impacting business. _____External forces are all uncontrollable factors that affects international business only. .                                                                                                         _____Internal forces are controllable factors which management can control such as PRICE.   

11

(a) Please list and briefly define 4 of the 7 Entry Strategies into Global Business.(IB)                               (i)_____       (ii)_____   (iii)_____           (iv) _____                                                                       (b) ______ is the easiest and less costly.        _______ is the most expensive & risky?                          

12

Define and Distinguish between LICENSING and FRANCHISING (give example for each)                              International Franchising: ______________                                                                                     International Licensing: _________________                                                              ______Company is a great example where a company effectively participates & benefits from I/B through one of the above methods; .       

Answer 1

Answer for Question No:12

Define and Distinguish between Licensing and Franchising.

A license is a legal relationship where one party called the Licensor, grants to the other party is called Licensee. It is granting a limited right related to a particular asset, it may be a trade mark, a particular formula, technology, etc.

In Licensing the manufacturer gives the right to to use its technology, copy right and patent, etc to another manufacturer in foreign country. Manufacturer in domestic country is called as "licensor" and Manufacturer in foreign country is called as " Licensee".

Example: Walt Disney granting McDonalds a license for McDonalds to Co-brand its McDonalds happy meals with a Disney Trademark Character.

Eg; microsoft granting a license to individual users allowing them to use the Windows Operating System.

The following are the advantages and disadvantages of Licensing

Advantages	Disadvantages
1. Relatively low investment on the part of licensor	1. Market opportunities are reduced for both licensee and licensor
2. Low financial risk for licensor	2. If there is legal hassle, cost of litigation is very high
3. Risk of failure does not rest with licensee	3. Trade secrets can be leaked out
4. License has more knowledge of local market	4. Sells goods outside the choosen territory after expiry of the contract.

Franchising:

A franchise is a legal relationship, where one party called the " Franchisor" , grants to the other party called "the Franchisee", the right to develop, establish and duplicate the operations of the franchisor's business. Eg: McDonalds restaurants.

It is a business operates under an existing name. Here, Independent organization, that is the Franchisee operates the business under the name of the another company. (Franchisor)

The following are some advantages and disadvatages of Franchisng

Advantages	Disadvantages
1. Relatively low investment on the part of Franchisor	1.Market opportunities are reduced for both franchisee and franchisor
2. Risk of product failure does not rest with Franchisee	2. Trade secrets can be leaked out
3. Franchisor learns form experience of the Franchisee	3. International manufacturing is more complicated than domestic franchising
4. Franchisor gets the full information about the markets of host countries	4. Added responsibility on both parties to maintain quality.

1.One major distinction between Licensing and Franchising is the former is used in connection with production and marketing of goods, the term Franchising is applied to service business.

2.Franchising is more stringent than licensing.

3.Franchisers usually sets strict rules and regulations as to how the franchisees should operate while runnig their business.