Trade in the modern world

Question 1

Licensing Agreements

Answer 1

• Gives a company permission to use a product, service, brand name, or patent, in exchange for a free or royalty
• Often it is only applicable in a specific region

Question 2

Exclusive distribution rights

Answer 2

• Another form of licensing agreement
• Allows a company to be the only distributor of a product in a specific area
• Most commonly used for manufacturing processes

Question 3

Franchising

Answer 3

• A franchise is an agreement to use a company’s name, services, products, and marketing
• The franchise(buyer) signs a contract and agrees to follow all of the franchisor’s rules

Question 4

Joint ventures

Answer 4

• Occurs when 2 businesses (one of which is usually located in a foreign country) form a new company with shared ownership
• It allows companies to gain access to new markets, products, and customers
• Share financial, managerial expertise, technology, cultural information and risk reduction

Question 5

Foreign subsidiaries

Answer 5

When a parent company allows a branch of its company in another country to be run independently