Cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed by an explicit contract. " Questions 15-1. a majority-owned (e. View Test Prep - licensing and franchising from ECONOMICS 12 at Xavier Institute Of Management & Research. London: Kogan Page. The time required to implement entry modes to foreign markets may strongly vary: contract-based entry modes usually entail quicker realization compared to equity-based entry modes. Footnote 3 We assume that the entering firm E and the domestic incumbent I have identical and constant marginal cost c if firm E uses the FDI strategy. Second, some firms find it less risky and more profitable to export existing products, instead of developing new ones. . market entry strategies are numerous and imply a varying degree of risk and of commitment from an international firm. The investment entry mode is the one that requires the most commitment on the part of a company, in terms of both management time and financial and human resources. 3. Corporate level strategies. 4. . In any case, the future trade. Terms in this set (17) Contractual entry strategies in international business. Driscoll (1995) identified three modes to enter a foreign market: Export entry modes, Contractual entry modes, Investments modes. Offers you a passive source of income. Contractual modes involve the. These variables are: The amount of risk; The degree of control and ownership- they are governed by a contract that provides the focal firm a moderate level of control over the foreign partner - they typically include the exchange of intangibles (intellectual property) and services - firms can pursue them independently or in conjunction with other foreign market entry strategies - they provide a dynamic, flexible choiceBefore undertaking contractual entry strategies abroad, management ____. 7. Cooperative alliances known as strategic alliances, strategic international alliances, and global strategic partnerships (GSPs) represent an important market entry strategy in the twenty-first century. S. Licensing or Franchising partner has knowledge about the local market. Export describes business activities where goods and/or services are sold outside the country in which the major value-added activities took place. firm that handles all aspects of export operations under a contractual agreement. They typically include the exchange of intangibles and services. A) licensing B) contract manufacturing C) management contracting D) joint ownership . Preview. However, afterBuild trust, build interpersonal relationships, get to know each other, build an informal network between the 2 firms managers. Exporting The most commonly used entry strategy that is both profitable and of low risk is based on the sale of product directly in the focused market with no. The respective statements are as follow: 1. Study Ch. Contractual forms of entry (i. Define and distinguish the following contractual entry strategies: build-operate-transfer, turnkey projects, management contracts, and leasing. 3) Franchising Services. 2. Contractual entry modes are long-term nonequity associations between an international company and an entity in a foreign target country that involve the transfer of technology or human skills from the former to the latter. , Licensing is a contractual agreement whereby one company (the licensor) makes a legally protected asset available to another company (the licensee) in. Dynamic, emerging markets in Asia and Latin America, as well as large, stable markets in North. 5. Clear direction: Market entry strategies require market research about exporting guidelines, foreign tariffs, and more. Which of the following is a contractual entry mode? A) joint venture B) wholly owned subsidiaries C) licensing D) exporting. - negotiate a formal agreement. Contractual entry strategies in international business. As discussed in the preceding chapter, entry mode choice is seen as “a critical component” in the process of internationalization (Morschett et al. It’s a low-cost, low-risk option compared to the other strategies. , licensing and franchising) have lower up-front costs than investment modes do. Here are 10 market entry strategies you can use to sell your product internationally: 1. International Entry Decisions • 2 minutes. greenfield investment An. 0 International License. Exit strategy. Ask a question to Desklib · AI bot. Companies need to have a strategy to enter world markets. ideas or works created by individuals or firms, including discoveries and inventions; artistic, musical, and literary works; and words. International Business: The New Realities, 4e (Cavusgil) Chapter 15 Licensing, Franchising, and Other Contractual Strategies _____ is a fee paid periodically to compensate a licensor for the temporary use of its intellectual property, often based on a percentage of gross sales generated from the use of the licensed asset. Avoids the cost of establishing local manufacturing operations, and it helps the firm achieve experience curve and location economies. Select one nation in Africa or South America and indicate which strategy you believe would be best for a mid-size American manufacturing firm that is considering entry into that nation. Angelica Weiss Chapter 16: Licensing, Franchising, and Other Contractual Strategies Contractual entry strategies in international business: cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an explicit contract Intellectual property: ideas or works created by individuals or firms, including discoveries. Direct exporting. Easing entry and exit of companies through: A low-cost entry into new industries (a company can form a strategic partnership to easily enter into a new industry). Contractual obligations mainly depend on the entry mode. Royalties. Licensing is a relatively sophisticated arrangement where a firm transfers the rights to the use of a product or service to another firm. The advantages of _____ are most apparent when capital is scarce, import restrictions forbid other means of entry, a country is sensitive to foreign ownership, or patents and trademarks must be protected against cancellation for nonuse. The quality of its production, the ability to adapt to the preferences of buyers and a meticulous licensing strategy are the main factors that have led to the firm's remarkable success in the U. licensing, and contract manufacturing. turnkey operation O c. 3 Contractual Entry Modes in North America, West Europe and Other Countries 41 5. Let’s look at the two main contractual entry modes, licensing and franchsing. The contract also controls the money transfers. There are two major types of market entry modes: equity and non-equity. , 2000). 9 Types of Foreign Market Entry Strategies. Exporting to a foreign market is a quite common entry strategy many firms follow for at least some of their market. Other Contractual Entry Strategies Chapter 15 Contractual Entry Strategies There are two common types of contractual entry strategies; 1. Franchising is a contractual international market entry mode as a licensing agreement when an organization wants to enter a foreign market quickly with low risk and resource commitment. How does LEGO generate royalties by using contractual entry strategies? (LO 15. Transport costs, trade barriers, political risks, economic risks, costs and firm strategy. 3. As in the traditional entry mode and international franchising literatures, it is suggested that both organizational and environmental determinants influence the franchisor’s choice of entry mode (direct franchising, foreign direct investment, area development agreement, joint. The Five Common International-Expansion Entry Modes. -determine the nature of legal relationship with the prospective partner. Kogut and Zander ~ í99 ï give the addition to these two FDI strategies: the transaction market entry of licensing. The contract. Nonequity- based entry strategies offer better protection against country risks and transactional hazards than equity-based strategies but non-equity strategies, such as export and contractual agreements, enable less organizational learning. Answered by PrivateWombatMaster624. Strategic planning, due diligence, consistent follow-up, and, perhaps most important, patience and commitment are prerequisites for successful businesses in India. lacks the resources to make a significant commitment to the market. ). Contract Manufacturing Contract manufacturing obviates the need for plant investment, transportation costs and custom tariffs and the firm gets the advantage of advertising its product as locally made. Essentially franchising as a contractual entry mode can be described as a type of licence agreement which means that an organization wants to enter a foreign market quickly with a low degree of risk and. Contract manufacturing also enables the firm to avoid labour and other problems that may arise from its lack of familiarity with the local. C) licensing contract covers more aspects of operations. Firstly, it needs to determine the goals of the joint venture and align them with the strategic objectives of all the participating entities. Disadvantages. 50 per tick x 264). Licensing: Arrangement in which the owner of. Points out of 7 Select one: Remove flag True False Question 18 Nations with economies based on agriculture and textile. (2005). When LEGO set its sights on China, it entered the market by putting money into opening LEGO stores in major cities as well as cities that showed demand and interest. How does LEGO generate royalties by using contractual entry strategies? In answering this question you should understand the role of royalties within an organization. 1 Explain contractual entry strategies. Indirect and Direct Export. 1 Explain contractual entry strategies. Expert Answer. With the export strategy the marginal cost of firm E is higher due to. [2] defined market entry as "a planned move into a new or adjacent market for the creation and delivery of offerings. Direct investment. There are two major types of market entry modes: equity and non-equity. Contractual entry strategies in international. Contract manufacturing B. 2. These. ideas or works created by individuals or firms, including discoveries and inventions; artistic, musical, and literary works; and words. Flashcards. Other benefits include political connections and distribution channel access. Conflict, Administrative, Geopolitical and Cultural potential. To summarize, in this foreign market entry mode, a licensor in the home country makes limited rights or resources available to the licensee in the host country. There are two major types of market entry modes: equity and non-equity. Includes such knowledge-based assets of. 5 Ease of doing business To ease how the company does things, Louis Vuitton uses a specific marketing strategy to achieve this. Contractual entry strategies Licensing does not bear the costs and risks of investment and avoids political/economic Restrictions in a country. The mode of entry depends on the opportunity, what you know about it, and the opportunity cost of putting that effort and money into another opportunity. S. Study with Quizlet and memorize flashcards containing terms like Contractual entry strategies in international business, Intellectual property, Intellectual property rights and more. S. Firms need to evaluate their options to choose the entry mode that best suits their strategy and goals. Exporting. In doing so, they would be switching from a contractual to an ownership-based entry strategy. implement its product market strategy in a host country either by carrying out only marketing . Entry Direct and indirect exporting Contractual Entry Licensing/franchising, technical agreements Contract manufacturing,. They often enjoy complete de facto strategic and operational control (Contractor and Kundu, 1998b; Dunning, 1988). Licensing. decide on the goals of the target markets. ‘Market’ in this case may refer to a market segment, domestic or international. In the last section, section 2. In international business, choosing the right entry mode is essential to maximize the success of your international expansion. When the executives in charge of a firm decide to enter a new country, they must decide how best to do it. Step 2: Determining market feasibility. His new edition represents the latest word on an evolving and complex subject. Franchising is a form of licensing, which is most often used. International Market Entry Mode. 3, there are trade-offs in the selection of the method of entry to another country. The theory presented argues that as institutional voids in a firm’s host country escalate, the firm sets. 6. Access International Business: The New Realities [RENTAL EDITION] 5th Edition Chapter 15 solutions now. It’s a low-cost, low-risk option compared to the other strategies. Contractual entry strategies in international business are cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed by an explicit contract. We reviewed their content and use your feedback to keep the. Available under Creative Commons-ShareAlike 4. 1. Resource constraints can limit SMEs. Who are the experts? Experts are tested by Chegg as specialists in their subject area. Upload to Study. There are five basic options available: (1) exporting, (2) creating a wholly owned subsidiary, (3) franchising, (4) licensing, and (5) creating a joint venture or strategic alliance (Figure 7. Strategic Management Chapter 7. The subject of market entry strategies is a much-researched but still contemporary one. Production in foreign country 1-Contractual Entry Licensing: Licensing is defined as “the method of foreign operation whereby a firm in one country agrees to permit a country in another country to use the manufacturing, processing, trademarks, knowhow or some other skill provided by the licensor” • A company assigns the right to a patent or a. Terms in this set (19) Contractual entry strategies. Contractual entry strategies in international business. Study with Quizlet and memorize flashcards containing terms like Royalty, Franchising, Exporting and foreign direct investing are two common types of contractual entry. , 2016). The difference between a franchise contract and a licensing contract is that a. 38 terms. Each mode of market entry has advantages and disadvantages. Going Global • 8 minutes. In order to enter the. , reported a net loss of $13. Cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed by an explicit contract. Adopting this contract management strategy can benefit businesses in several ways. Need thoughtful strategy to tackle dissimilarities at different levels (global, macro, micro) Entry strategies depend on numerous factors including ; Size of the market, business environment ; Product-market fitThis course focuses on the challenges and opportunities associated with organizational management and business strategy in emerging economies. , 2010: 60). LEGO is a late entrant in the contractual. The following sub heading will discuss how licensing impacts market entry in the United States. Study with Quizlet and memorize flashcards containing terms like ________ are partnerships between two or more firms that decide they can better pursue their mutual goals by combining their resources as well as their existing distinctive. Contract: Liscening Agreement. Some companies use direct exporting, in which they sell the product they manufacture in international markets without third-party involvement. There are as many motives as there are strategies for international expansion. Source. This chapter examines the management contract and the key components that shape its success as an entry mode. Research and analyze international opportunities and to develop a coherent export strategy. This systematic literature review. contractual agreements, joint ventures and wholly owned subsidiaries. Question: Exporting and foreign direct investment are the two most frequently employed contractual entry strategies, Select one: O True O False of the following terms, which refers to a focal firm's partial ownership of an existing firm? Select one: O a equity participation O b. For example, a contract with an agent can usually be dissolved quite quickly. Reduces political risk as in most cases, the licensing or franchising partner is a local business entity. 1. Contractual entry strategies in international business Click the card to flip 👆 Cross-border exchanges in which the relationship between the focal firm and its foreign partner is. Semester 2, 2017/18 ATW 395/3 International Business Learning Objectives. Provides access to new markets. (1995) introduced a comprehensive foreign market entry decision framework. MASTER’S THESIS Arcada Degree Programme: International Business Management Identification number:With contract manufacturing as a strategy of foreign market entry, it is likely that the manufacturer will take over the entire process of producing the goods, especially if it is rather easy and coherent, as for example the German skin-care products company Beiersdorf, which transfers production of its Nivea cream for the Philippinean market. Explain what steps a firms should take to launch a collaborative venture with a foreign partner successfully. While extant research revolves around the level of resource commitment and control in foreign activities, non-traditional. Direct exporters often sell directly to a consumer (B2C), a business (B2B), or a distributor in a foreign country. Licensing concerns a product rights or the method of production marketing the product rights. Major Issues In Going Global Global marketers have to make a multitude of decisions regarding the entry mode which may include: (1) the target product/market (2) the goals of the target markets (3) the. Equity. The first step is to decide on what you want to achieve with your exporting project and some basics about how you’ll do so. , Patents provide inventors the right to. Adloonix team takes care of details. Besides, licensing is often adopted in view of environmental factors, such as country entry barriers, to curb product piracy and counterfeiting, and for expanding into countries where the market size is not large enough to justify higher investments. For international trade, Foreign market entry modes are the ways in which a company can expand its services into a non-domestic market. We define franchising as a strategy mainly used by service companies, that allows the franchisee to use a business model, processes or brand name for a fee, to conduct. -determine the nature of legal relationship with the prospective partner. One of the advantages of direct exporting for company include more control over the export process. , 2005) to function. entry strategies based on strategic considerations of exploitation and augmentation of knowledge andThis strategy requires direct foreign investment from the company. 18. Secondly, the automation process empowers commercial teams to self-serve on contracts, rather than waiting on. 55. Discard Apply . 1 (EUR one33. wishes to maintain direct control of the marketing program. That means, entry mode strategies are often massive, irreversible, and can influence the performance of the firm in the long run. strategic international alliances, and global strategic partnerships (GSPs) represent an important market entry strategy in the twenty-first century. Contractual Entry Strategies in International Business. , Which of the following is a potential disadvantage to licensing?, Which of the following is a general term that refers. View Sample Solution. market size. Key marketing strategy #1: LEGO’s phenomenal market entry strategy. First, mature products in a domestic market might find new growth opportunities overseas. dynamic, flexible choices 5. Which entry mode to use. tax benefits, subsidies, etc. ,The study has identified the knowledge gap concerning suitable contract risk management strategies available for implementation to effectively prevent any contract parties from losing money, time and. 1. Contract Manufacturing. 3) The company is able to. Chapter 16 pg. Fresh features from the #1 AI-enhanced learning platform. Licensing affords new international entrants with a number of advantages: Licensing is a rapid entry strategy, allowing almost instant access to the market with the right partners lined up. It’s a low-cost, low-risk option compared to the other strategies. Intellectual property. Conclusion: Licensing and franchising are two contractual entry strategies that offer distinct advantages and disadvantages. List of Abbreviations. This definition includes both entry mode strategy and international market selection. g. governed by a contract that provides the focal firm with moderate level of control over the foreign partner 2. Advantages and disadvantages of licensing 4. 3 operations (i. international experience. This is an entry mode in which a firm contracts with a foreign firm to manufacture parts or finished products or to assemble parts into finished products. Cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an exploit contract. 4 types of market entry strategies. 1 International-Expansion Entry Modes; Type of Entry Advantages. Allows for diversification. 2. Explain what steps a firms should take to launch a collaborative venture with a foreign partner successfully. management 6. Offers you a passive source of income. B. Resource commitment in an emerging market is examined in terms of the degree of control of the entry strategy employed. is a distinctive design or symbol that identifies a product or service. Study with Quizlet and memorize flashcards containing terms like ________ is defined as a contractual arrangement whereby one company makes a legally protected asset available to another company in exchange for some form of compensation. Direct exporting allows consumers or businesses in new markets to easily buy your products wholesale, where you handle the shipping. The strategic importance of an international business operations lie in that a firm can maintain more control over international business and enhance experiential knowledge, critical for further overseas. Chapter 7: Market Entry Strategies. It is two-fold, dealing with both outbound and inbound licensing. Royalties are responsible for protecting the owner of patents and they are usually abided by agreement that give others space to use property (Bonadio, 2015). LEGO says it is determined to secure a fair share, without com- promising its mission: to "redefine play and re-imagine learning. Define and distinguish the following contractual entry strategies: turnkey projects, build-operate-transfer, management contracts, and leasing. Increases revenue and profits. Pre-entry market evaluation and formulating a market entry strategy. g. Different entry modes differ in three crucial aspects: The degree of risk they present. Management contracts are increasingly popular among owners. 2) Licensing Services. $ 151. 1. There are four different approaches of foreign market-entry from which to decide on: exporting, contractual agreements, strategic alliances, and direct foreign investment. The different approaches of market-entry can be further classified on the basis of the equity or non-equity requirements of each approach. Changes in the franchisors’ strategy may be slow to implement, because franchise contracts usually run for 3–5 years, and substantial changes are only possible by changing the contracts. The way that the intellectual property is used depends on the details of the contract. Licensing is an arrangement by which the owner of intellectual property grants another firm the right to use that property for a specific time period in exchange for royalties or other compensation. 6 Joint Ventures VIII. A deliberate and well-planned Modular Contracting strategy can provide SWP programs with flexible. • Often mitigate liability of foreignness for the focal firm. The book connects to students of the technological age, facing a diverse and evolving economic environment fueled by. However, the focus in this chapter is on M&A as a market entry or expansion mode, because cross-border. Runnerz Inc. Barkema, Bell and Pennings (1996) suggest that low commitment entry strategies may be preferred to. Chapter 15 Licensing, Franchising and other Contractual Strategies Internatonal Business:Ch09 Global Market Entry Strategies Licensing Investment and Strategic Alliances. The choice of international strategy has long-term implication for MNCs. Turnkey projects could be considered especially with significant customers and as a specific type of project marketing as actors through the network of. contractual entry investment entry. Step-By-Step Solution. Contractual entry strategies in international business. , a leading manufacturing and retail company that designs and develops footwear and apparel, has signed a contract with a particular courier service for managing the delivery process. 5 characteristics of cross-border contractual relationships. Using the results of your market research, choose a market entry strategy. make it difficult for later entrants to win business. The simplest form of entry strategy is exporting using either a direct or indirect method such as an. Beyond importing, international expansion is achieved through exporting, licensing arrangements, partnering and strategic alliances An international entry mode involving a contractual agreement between two. 412 Contractual entry strategies in international business- cross-border exchanges where the7. Market small, might export or contractual entry. Contractual modes involve the use of contracts rather than investment. Entry Strategies for Emerging Markets; 2 Entry Strategies for Emerging Markets. • Intellectual property: Ideas or works created by firms or individuals, such as patents, trademarks, and copyrights. Firms can pursue them independently or in conjunction with other foreign market entry strategies. D) franchise contract involves less control and. Includes such knowledge. 1 Each mode of market entry has advantages and disadvantages. Study with Quizlet and memorize flashcards containing terms like 1) Contractual entry strategies in international business are cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed by an explicit contract. 4 Entry Strategies of Multinational Corporations into New Markets. Secondly, it should involve detailed market analysis to understand the competitive landscape and potential challenges. 15. Motives for FDI-Market-seeking motives-Resource or asset-seeking motives-Efficiency-seeking motives. Posted on 03/06/2021 by admin. , 2000). g. Root (1994:86) mention licensing, franchising, technical agreements, service contracts, management. Definition: Market Entry Strategies are the plan, methods or channels available with the firm to expand their business in the new target market within and across nations. Jun 16, 2017. Strategic factors in selecting an entry mode: cultural environment. Outbound licensing applies to the use of LEGO’s. Exporting is the direct sale of goods and / or services in another country. Which statement about cross-border contractual relationships is FALSE?. Firms need to evaluate their options to choose the entry mode that best suits their strategy and goals. Learn from your partner (and apply that knowledge within your organization) Study Chapter 5: Entry into Foreign Markets flashcards. Study with Quizlet and memorize flashcards containing terms like What entry strategy gives a firm the right to manufacture another firm's product or use its trademark for a royalty fee?, What form of business ownership is a contractual agreement whereby someone with a good idea for a business sells others the rights to use the business name and sell a. In this section, we will explore the traditional international-expansion entry modes. Students also viewed these Business Communication questions. D) joint ownership. 2 Understand licensing as an entry strategy. Process. Exporting is an effective entry strategy for companies that are just beginning to enter a new foreign market. 3. All tutors are evaluated by Course Hero as an expert in their subject area. The courier service is required to deliver goods from the factory to the warehouse, to customers, and also to collect customer payments for the goods. (2017) foreign market entry modes are a structural agreement that makes a firm able to do their business activities in the international market. For courses in international business. Two common types of contractual entry strategies are licensing and franchising. The company contracts a firm in the foreign market to assemble or manufacture the products but they still have the responsibility for marketing and distribution of the products according to Root (1994:113); Chapter Overview. Jeannet and Hennessy (2001) use control, asset level, variable costs. In the long term, every modern business wants to expand its reach to international markets, which would eventually spike its profit and growth. Question: Contractual entry strategies in international business are cross-border exchange in which the relationship between the focal firm and its forgein partner is. Exporting is a low-risk strategy that businesses find attractive for several reasons. View Solution. This research process involves legal counsel and international distributors. drive early entrants out of the market. As shown in Figure 9. Global sourcing is a specific type of international contracting that we addressed in Chapter 13. When an organisation has made a decision to enter an overseas market, there are a variety of options open to it. The Five Common International-Expansion Entry Modes. Contractual entry strategies in international business Cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an explicit contract. Requires extensive research. 1. More recently, Brouthers and Hennart (2007. Direct Exporting. A contract manufacturer (“CM”) is a manufacturer that enters into a contract with a firm to produce components or products for that firm . To achieve the objective of internationalization, a company should take three factors into account and then choose appropriate entry modes. 27). This kind of ‘greenfield’ investment – ‘greenfield’ meaning. cross-border exchanges in which relationship between focal firm and foreign partner is governed by explicit contract. If well implemented, these strategies will help a construction project be successful and experience fewer contractual disputes. Conversely, we incur a $1,250 loss if we get stopped out. Foreign direct investment (FDI) D. , 75 percent) joint venture is a contractual entry mode strategy A solid joint venture entry strategy should encompass several important elements. 15. 1. Brownfield Strategy—contributing to a joint venture. cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an explicit contract. Firms can pursue them independently or in conjunction with other entry strategies. 3 billion). GLOBAL MARKET ENTRY STRATEGIES 2 LEGO Global Market Entry Strategies 1. The contract manufacturer will quote the parts. Solved by verified expert. In the context of foreign market entry strategies, the advantages of _____ are most apparent when capital is scarce, import restrictions forbid other means of entry, a country is sensitive to foreign ownership, or patents and trademarks must be protected against cancellation for nonuse. Which of the following is most likely a disadvantage to firms who use exporting as an entry strategy? high risk of low sales due to fluctuations in exchange rates. This loss occurred predominantly because Time Warner took a charge for asset impairments of $24,309 million, ($24. $ 151. Abstract. The entry strategies for China should be carefully planned and executed to ensure success in this competitive and rapidly evolving market. More than a third of the sales of toys and non-electronic games worldwide are generated through licenses. An MNC may move into that mode voluntarily (to test the waters, so to speak) or for purely defensive reasons (to prevent a competitor from entering the market or to. The franchisor shares ownership of the brand’s reputation and know-how with the franchisee in exchange for royalties established ex-ante through contractual arrangements (Brouthers and. Licensing is low risk in terms of assets and capital investment. The need for a solid market entry decision is an integral part of a global market. Focal firm has moderate level of control over the foreign partner. 1 (EUR one33. , visiting the country; importance of relationships to finding a good partner; use of agents. Market entry strategies involve market entry. Country Entry Timing • 6 minutes. These same reasons make exporting a good strategy for small and midsize companies that can’t or won’t make significant financial investment in the international. Recent advances in digitalization and increasing integration of international markets are paving the way for a new generation of firms to use non-traditional entry modes that are largely marginalized in previous entry mode studies. A firm wishing to expand into foreign markets can use contractual entry strategies, foreign direct investment, and exporting, among other strategies. Licensing is governed by a licensing agreement, which involves a one-time transfer of property or rights for a fee. 1 (€ 133) billion toy industry. GSPs are ambitious, reciprocal, cross-border alliances that may involve business partners in a number of different country markets. - Arrangement where owner of intellectual property grants another firm right to use property for specific time in exchange for royalties or other compensation. The correct answer is:.