Which Of The Following Forms Of Fdi Is A Co-Operative Agreement Between Firms

Answer the following questions, then click „Submit“ to get your score. Why do alliances between a large Western multinational and an emerging company often fail? In terms of risk mitigation, no company bears the full risks and costs of a joint activity in strategic alliances. This is extremely beneficial for companies involved in high-risk/cost activities such as R&D. This is also beneficial for smaller organizations that are more affected by risky activities. In this mode of entry into the foreign market, a licensor in the country of origin provides limited rights or resources to the licensee in the host country. Rights or resources may include patents, trademarks, management skills, technologies and others that may enable Licensee to manufacture and sell a similar product in the host country that is similar to the one That Licensor has already manufactured and sold in the home country without Licensor having to open a new operation abroad. Licensor revenues typically take the form of one-time payments, technical fees, and royalties, which are typically calculated as a percentage of sales. Compared to licensing, franchise agreements tend to be longer and the franchisor offers a broader set of rights and resources, which typically includes: equipment, management systems, user manual, initial training, site approval, and all the support the franchisee needs to run their business in the same way as the franchisor. In addition, while a licensing agreement covers things such as intellectual property, trade secrets, and others, franchising is limited to the company`s trademarks and business know-how. [14] Which of the following is NOT a strategic alliance? Some strategic alliances affect many companies that are fiercely competing outside the specific scope of the alliance. This carries the risk that one or both partners will try to use the alliance to create an advantage over the other.

The benefits of this alliance can lead to imbalances between the parties, there are several factors that can cause this asymmetry:[38] The use of strategic alliances and joint ventures is becoming increasingly popular with a growing number of multinational corporations. According to Cullen in his 1999 book, an international strategic alliance is an „agreement between two or more companies from different countries to work together in each value chain, from R&D to sales.“ A strategic alliance, distinct from a joint venture, is a collaboration aimed at achieving an isolated objective and does not involve equity participation of the partners. Hitt, Ireland, and Hoskisson proposed this definition: „A joint venture is when an independent company is formed by at least two other companies.“ A strategic alliance is a less rigid agreement than a joint venture. These cooperation strategies offer many potential benefits to the participant, but are also associated with particular problems. In a rotating management structure, key positions in the hierarchy alternate between companies. Each company designates a person for its mandate. This structure is popular if an alliance partner comes from a less developed country. With this type of management, local leadership can be trained so that technology and expertise are transferred to the community, Cullen said. .

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