decide on the goals of the target markets. An international licensing agreement allows foreign firms, either exclusively or non-exclusively, to manufacture a proprietor’s product for a fixed term in a specific market. Strategic Management Chapter 7. 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. Since the focal firm partners with a local firm, it may be able to shield some. -diversify sales-gain international business experience (low cost, low risk) Developing an Export Strategy: A Four-Step. This study conducted a meta-analysis to quantitatively. Preview. 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. 15. Foundation Concepts • Contractual entry strategies in international business: Cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed by an explicit contract. ). Exporting _____ involves a binding contractual agreement between two businesses whereby the marketing. There are as many motives as there are strategies for international expansion. Export modes of entry are a great place to start as they do provide immediate short-term benefits. Foreign market entry is the most important decision of a business unit. 1 (€ 133) billion toy industry. 15. Unique Aspects of Contractual Relationships. Step 4: Developing a market entry blueprint. Question: Contractual entry strategies in international business are cross-border exchange in which the relationship between the focal firm and its forgein partner is governed by an explicitly contract. 2. Principles of Management. 5. 5 characteristics of cross-border contractual relationships. Partnering. A contract manufacturer (“CM”) is a manufacturer that enters into a contract with a firm to produce components or products for that firm . 6 Understand other contractual entry strategies. The way that the intellectual property is used depends on the details of the contract. 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. Test. Firms move to new markets to grab the growth opportunities prevailing in different markets. Contract strategy means selecting organizational and contractual policies, means and methods required for the execution of a specific project throughout all stages of pre-design, design, construction and post construction with a goal of meeting main project objectives. Firms need to evaluate their options to choose the entry mode that best suits their strategy and goals. In addition to exporting, companies can choose to pursue more specialized modes of entry—namely, contracutal modes or investment modes. 1 Joint VentureIn this study, international entry mode choice is examined in a franchise setting. 412 Contractual entry strategies in international business- cross-border exchanges where the7. , 2) Exporting and foreign direct investing are two common types of contractual entry. Direct exporting is often considered the default choice for new market entry. Which of the following market entry strategies is considered the least risky? Exporting. Intellectual property. The non-equity modes category includes export and contractual agreements. In addition to exporting, companies can choose to pursue more specialized modes of entry—namely, contracutal modes or investment modes. decide on the time of entry. 25 “Market entry options”). FDIs have been portrayed as effective market entry strategy in the United States Market. Jeannet and Hennessy (2001) use control, asset level, variable costs. Identify the company/ies using the entry strategies and briefly explain how they participate in the International Business (refer your answer in no). It is a form of outsourcing. Which of the following is a contractual entry mode? A) joint venture B) wholly owned subsidiaries C) licensing D) exporting. Contractual entry strategy _____ in international business refer(s) to a cross-border exchange in which the relationship between the focal firm and its foreign partner is governed by an explicit contract. This research process involves legal counsel and international distributors. acquisitions), contractual entry modes (e. licensing vs franchising. Contract Manufacturing. The most common methods firms join international trade are through contractual entry strategies such as direct exporting, franchising, licensing, management contract, contract manufacturing, buying a company, and joint ventures. 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. High costs and risks. 1. These types of entry modes consist of several similar, but get different contractual arrangements between the firms form the domestic market and the company that licenses the intangible assets in the foreign market (Bradley 2005:243). This lecture includes: Entry Strategies for Emerging Markets, Competitive Levels, Product-Market Fit, Business Environment, Entry Strategies, Export Entry Modes, Contractual Entry Modes,. Question: Question 17 Not yet answered 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. It is important as a marketer that you understand the level of risk involved in each and are able to identify which strategy firms are currently using Firms looking to. [2] defined market entry as "a planned move into a new or adjacent market for the creation and delivery of offerings. 2. Cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed by an explicit contract. Exporting. Other Contractual Entry Strategies. com A) It is a more visible strategy than FDI and draws a lot of criticism from the local market. Going Global • 8 minutes. Requires extensive research. Advantages of Licensing and Franchising. It is a particularly useful strategy if the purchaser of the license has a relatively large market share in the market you want to enter. 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. It’s a low-cost, low-risk option compared to the other strategies. ideas or works created by individuals or firms, including discoveries and inventions; artistic, musical, and literary works; and words. Through a distribution contract, the foreign investor makes real its planned market entry strategy in order to achieve its goals. , 75 percent) joint venture is a contractual entry mode strategyContractual entry strategies in international business are cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed. 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. 15. Contractual entry 3. Offers you a passive source of income. Contract Manufacturing: Definition, Meaning, Advantages, Examples. 6 Joint Ventures VIII. 1 (EUR one33. The contract manufacturer will quote the parts. Abstract. For Shen et al. View Solution. Ideas or works created by firms or individuals, such as patents, trademarks, and copyrights. Export allows a fast and relatively less risky foreign market entry. Study with Quizlet and memorize flashcards containing terms like Contractual entry strategies in IB, Licensing def, Licensing pro and more. Each strategy has its own advantages and disadvantages that. Owen learns that the first step in developing a successful export strategy is _____. (1987) Entry strategies for international markets, Lexington, Mass, Lexington . 4) Joint Ventures for Service Providers. Greenfield is a form of FDI where your firms China market entry investment is undertaken through the construction of new operational facilities from scratch. Retrieved March 24, 2022, from marketing91/contract-. LEGO products are in 130 countries—but the company is always looking to expand its operations. A collective mark _____. Motives for FDI-Market-seeking motives-Resource or asset-seeking motives-Efficiency-seeking motives. Clear direction: Market entry strategies require market research about exporting guidelines, foreign tariffs, and more. 50 per tick x 264). In any case, the future trade. Terms in this set (17) Contractual entry strategies in international business. 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. S. Key elements of the acquisition strategy include, but are not limited to: Flexible and modular contract strategy that enables software development teams to rapidly design, develop, test, integrate, deploy, and support software capabilities. Set clear goals. 1. Doing Business in Emerging Markets: Entry and Negotiation Strategies Milind R Agarwal , Pervez Ghauri , Tamer Cavusgil There are many texts available on International Business, but only a few provide a. via export modes) or both production and marketing operations there by itself. Direct exporting allows consumers or businesses in new markets to easily buy your products wholesale, where you handle the shipping. View chapter 15. Secondly, it should involve detailed market analysis to understand the competitive landscape and potential challenges. 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. Franchising. certain "cooperative" modes. Let’s look at the two main contractual entry modes, licensing and franchsing. , 75 percent) joint venture is a contractual entry mode strategyA solid joint venture entry strategy should encompass several important elements. 4. Exporting is a viable international entry strategy when the firm: a. Clear direction: Market entry strategies require market research about exporting guidelines, foreign tariffs, and more. The rising rate of globalization is prompting brands across the world to ‘think global’. Cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an explicit contract. Export describes business activities where goods and/or services are sold outside the country in which the major value-added activities took place. 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. 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. Companies need to have a strategy to enter world markets. , Licensing is a contractual agreement whereby one company (the licensor) makes a legally protected asset available to another company (the licensee) in. 5 Ease of doing business To ease how the company does things, Louis Vuitton uses a specific marketing strategy to achieve this. Studies have explored franchising as a contractual mode of entry, which represents a hybrid between markets and hierarchies (Hennart, 2010). Franchising. 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. As discussed in the preceding chapter, entry mode choice is seen as “a critical component” in the process of internationalization (Morschett et al. Exporting is a easy way to enter an international market. Explain what steps a firms should take to launch a collaborative venture with a foreign partner successfully. b. Typically include the exchange of intangibles and services. 1 Each mode of market entry has advantages and disadvantages. Fresh features from the #1 AI-enhanced learning platform. 3. Market entry strategies involve market entry. _____ is a contractual arrangement in which a company receives a royalty or fee in exchange for the right to use its trademark. Upload to Study. Cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an exploit contract. However, the story is very different when firms. 5. Franchising. contract-enforcing mechanisms (Khanna et al. Let's take a look these. , reported a net loss of $13. ENTRY STRATEGIES to foreign markets Exporting Contractual Entry Modes Foreign Direct Investment ( Many US co’s went directly through FDI) Exporting directly tied to. The non-equity modes category includes export and contractual agreements. C) protect ±rms from intellectual property theft 4. 18. London: Kogan Page. Other Contractual Entry Strategies Chapter 15 Contractual Entry Strategies There are two common types of contractual entry strategies; 1. Contractual Modes of Market Entry. In general, the implementation of an international development strategy is a process achieved. It emphasizes adapting products and services to local markets. The proposed definition of interna-Five other methods of entering the global marketplace are, in order of risk, exporting, licensing and franchising,contract manufacturing, joint venture, and direct investment. -Screen and qualify partner candidates. Source. 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. 443) Trade Related Entry This method of entering global markets is based on direct exporting or using intermediaries. c. Contractual obligations mainly depend on the entry mode. In order to enter the. The non-equity modes category includes export and contractual agreements. These modes of entering international markets and their characteristics are shown in Table [Math Processing Error] 7. It's also easier for the company to extricate itself from the situation if the results aren't favorable. 2. The investment. 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. The alliances often advance common goals, secure common interests, or leverage resources and. Jun 16, 2017. A firm wishing to expand into foreign markets can use contractual entry strategies, foreign direct investment, and exporting, among other strategies. Solved by verified expert. Disadvantages. (2004) differ between ownership-based entry modes (OBEs) and contract based modes (CBMs). 6. Other benefits include political connections and distribution channel access. The choice of foreign country markets and the selection of corresponding market entry strategies belong to classical questions in the international business research, which – despite their high relevance for business success – have not yet been consistently solved. 2) The licensing company benefits from the licensee company’s local market knowledge. Study with Quizlet and memorize flashcards containing terms like Low-control Strategies (Exporting and Counter-trade & Global Sourcing), Moderate-Control Strategies (Licensing, Franchising and other Contractual Strategies, Project Based (non-equity) collaborative ventures), High-Control Strategies (Minority-owned and Majority owned equity joint venture & Wholly Owned Subsidary (FDI) ) and more. 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. cross-border exchanges in which relationship between focal firm and foreign partner is governed by explicit contract. Intellectual property. -They typically include the exchange of. b) Market research: Data collection and profound survey to understand industry, rivals, and perspectives. 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. Contractual agreements are more risky than FDI. -They typically include the exchange of intangibles (______ ______) and services. C) licensing contract covers more aspects of operations. [TITLE] 5 Source: International Business by Rakesh Mohan Joshi (Pg No. directly tied to jobs. They provide dynamic flexible choice Exporting is an effective entry strategy for companies that are just beginning to enter a new foreign market. Types of Contractual Relationships Licensing An arrangement in which the owner of intellectual. A) initiation of meetings with intermediaries B) matching of market needs to company abilities C). 1. More recently, Brouthers and He nnart (2007) classified entry modes into two broad categories,Some of the most common strategies for market entry include: Exporting. • Often mitigate liability of foreignness for the focal firm. market entry strategy: right to adopt entire business system. Transport costs, trade barriers, political risks, economic risks, costs and firm strategy. Expert Answer. 1. two common types of contractual entry strategies relatively inexpensive way for a firm to establish a presence in the market without having to resort to FDI RoyaltyContractual 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. Entry Strategies for Emerging Markets; 2 Entry Strategies for Emerging Markets. Market small, might export or contractual entry. Contract management refers to the process of creating, negotiating, assessing, and monitoring a contract’s performance to ensure that both parties fulfill their obligations. While the pandemic has led Indian companies to work more frequently with global partners in virtual environments, it remains to be seen whether this is a permanent shift in business practices. none of the aboveContractual entry modes include licensing, turnkey construction contracts, and management contracts. Becoming a “habitual” supplier of products and services to loyal customers. 1 International-Expansion Entry Modes; Type of Entry Advantages. -Screen and qualify partner candidates. Entry mode choice is a function of a firm's strategy to increase its competitiveness, efficiency, and control over resources that are critical to its operations. They often enjoy complete de facto strategic and operational control (Contractor and Kundu, 1998b; Dunning, 1988). Contractual entry strategies in international business. Fresh features from the #1 AI-enhanced learning platform. 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); Albaum & Duerr (2008:380). Two common types of contractual entry strategies are licensing and franchising. The entry strategies for China should be carefully planned and executed to ensure success in this competitive and rapidly evolving market. What is contractual entry mode? Two common types of contractual entry strategies are licensing and franchising. Chapter 16 - Licensing, Franchising, and Other Contractual Strategies. Contractual modes involve the. To accomplish the goal. First, we contribute to international market entry research by identifying reciprocity as a non-contractual mode that has been largely ignored in. The need for a solid market entry decision is an integral part of a global market. 15. Franchising as an entry strategy 5. C) licensing. give later entrants a cost advantage over early entrants. ability to preempt rivals and capture demand by establishing a strong brand name. firm can pursue individually or in conjunction with other entry strategies 4. Includes such knowledge. SOURCE : Root, Foreign Market Entry Strategies, p. wishes to maintain direct control of the marketing program. Contractual entry strategies involve using contracts such as licensing and franchising. 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. 1. Exporting. - Arrangement where owner of intellectual property grants another firm right to use property for specific time in exchange for royalties or other compensation. Course. 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. -determine the nature of legal relationship with the prospective partner. 3. Respective advantages and disadvantages will be analyzed. 5 Explain the advantages and disadvantages of franchising. ENTRY STRATEGIES. A deliberate and well-planned Modular Contracting strategy can provide SWP programs with flexible. Exporting When a company decides to enter the global market, exporting is usually theleast complicated and least risky. An explanation of the risk/reward versus control paradigm that all executive teams have to consider. Keywords: Internalization, Market entry modes, Export, Wholly owned subsidiaries, Joint venture, Contractual modes 1. 6 Network and Relationships Importance for Huawei 42. (2004) differ between ownership-bas ed entry modes (OBEs) and contract based modes (CBMs). Joint ventures. Don’t agree to anything or sign anything without first checking out the other party and its legal background. Strategic factors in selecting an entry mode: cultural environment. Therefore, it leads to greater success in the global market. independently or in conjunction with other foreign market entry strategies (exporting/FDI) 4. Q: In 2008 Time Warner, Inc. Exporting is an effective entry strategy for companies that are just beginning to enter a new foreign market. Conclusion: Licensing and franchising are two contractual entry strategies that offer distinct advantages and disadvantages. 2 The Entry Mode In this paper, we use the Uppsala model (Johanson & Wiedersheim-Paul 1975). Try it freeVerified Answer for the question: [Solved] Before undertaking contractual entry strategies abroad, management _____. A company that decides to enter the international market. Study with Quizlet and memorize flashcards containing terms like Contractual entry strategies in int'l business:, Contractual Entry Strategies:, Unique Aspects of Contractual Relationships: -They are governed by a contract that provides the focal firm with a _____ level of control over the foreign partner. licensing). A license is “a contractually transferred right to use a legally protected or unprotected in vention in exchange for a fee or another type of compensation” (Mordhorst 1994, p. Along with Coca-Cola, recognized as the world’s most valuable brand, the company markets four of the world’s top five nonalcoholic sparkling brands, including Diet Coke, Fanta, Sprite, and a wide range of other beverages, including diet and light beverages, waters, juices and. Chapter 16 Licensing, Franchising, and Other Contractual Strategies Learning Objectives: 1. Market entry strategies involve market entry. 4. What is a contractual entry mode? Contract Manufacturing: – This entry mode is a cross between licensing and investment entry. Advantages of Licensing and Franchising. Each category has several subcategories. 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. + little or no investment required,. Direct exporting. To achieve the objective of internationalization, a company should take three factors into account and then choose appropriate entry modes. As discussed in Chapter 8, all but exporting are also methods to accomplish corporate strategies in their domestic markets to diversify their portfolio. ENTRY STRATEGIES to foreign markets Exporting Contractual Entry Modes Foreign Direct Investment ( Many US co’s went directly through FDI) Exporting directly tied to jobs Disadvantage: no intern-al knowledge of the market Types • Indirect • Direct agent/distributor • Direct branch/subsidiary Export Services • Export Management Company • Trading. 27). Governed by a contract that provides the focal firm with a moderate level of control over the foreign partner. 5, the conclusion of this chapter will be given. What is the best market entry strategy?. There are two major types of market entry modes: equity and non-equity. Contractual entry strategies in international business. This definitio n includes both entry mode strategy and . In this section, we will explore the traditional international-expansion entry modes. 2 Franchising. Complete Guide. Some companies use direct exporting, in which they sell the product they manufacture in international markets without third-party involvement. The international business and marketing literature classify entry modes for international business operations into the following categories based on the risk-return trade-off, degree of control, and resource commitment: exporting, contractual agreements, wholly owned subsidiaries and strategic alliances. Exporting. 1 Explain the difference between adaption and standardisation in international marketing. Joint. The non-equity modes category includes export and contractual agreements. Everybody deserves the benefit of the doubt, but it’s important to establish that the party is indeed legally able to enter a contractual relationship. The equity modes category includes joint ventures and wholly. Management contracts are increasingly popular among owners. , 2) Exporting and foreign direct investing are two common types of contractual entry strategies. a majority-owned (e. Beyond importing, international expansion is achieved through exporting, licensing arrangements, partnering and strategic alliances An international entry mode involving a contractual agreement between two or more enterprises stipulating that the involved. 3. Adopting this contract management strategy can benefit businesses in several ways. When to enter them and on what scale. Define and distinguish the following contractual entry strategies: turnkey projects, build-operate-transfer, management contracts, and leasing. The institutional distance between home and host countries influences the benefits and costs of entry into markets where a firm intends to conduct business. 4 Conclusion. The. The leading toymaker that is sure in the building block toy market with a market share of eighty five percent globally. strategic international alliances, and global strategic partnerships (GSPs) represent an important market entry strategy in the twenty-first century. - Firms that use licensing often can avoid expensive entry as is usually required in FDI. INVESTMENT ENTRY MODE. Ideas or works created by firms or individuals, such as patents, trademarks, and copyrights. This loss occurred predominantly because Time Warner took a charge for asset impairments of $24,309 million, ($24. Diff: 1: Easy Skill: Application Objective: 15-1: Explain contractual entry strategies AACSB: Analytical Thinking 7) An industrial design is intended to _____. Market entry strategies are the methods and channels that a company uses to enter a new market. Less control, licensee may become a competitor, legal and regulatory environment (IP and contract law) must be sound: Partnering and Strategic Alliance: Shared costs reduce investment needed, reduced risk, seen as local entity:. This research process involves legal counsel and international distributors. Contracts. Explain what steps a firms should take to launch a collaborative venture with a foreign partner successfully. One of the advantages of direct exporting for company include more control over the export process. they typically include the exchange of intangibles and services 3. Two companies, one foreign and one Indian, come together to form a Joint Venture. Firms need to evaluate their options to choose the entry mode that best suits their strategy and goals. These options vary in terms of how much. S. 2. g. 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. 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). Exporting Contractual Entry Modes Foreign Direct Investment (directly through FDI) Many US cos went Exporting. View Test prep - 8793_MAN3600_Test_4 from MAN 3600 at Florida State University. Can be pursued independently or in conjunction with other entry strategies. Franchising is a form of licensing, which is most often used. 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 Hennart, 2007). Turnkey projects could be considered especially with significant customers and as a specific type of project marketing as actors through the network of. S. Conversely, we incur a $1,250 loss if we get stopped out. Foreign direct investment (FDI) D. Foreign licensing is a simple way of getting involved in international marketing. With the export strategy the marginal cost of firm E is higher due to. Chapter 16, Problem Comprehension 10. Licensing and franchising are examples of transfer-related market entry strategies. It’s a low-cost, low-risk option compared to the other strategies. an entry strategy requires decision on (1) the choice of a target product/market, (2) the objectives and . stages are not followed carefully. researchers (Distler, 2005; Laudicina, 2012) who suggest that the locus of global. It is therefore recommended for the provision of financial services in the U. Resource commitment in an emerging market is examined in terms of the degree of control of the entry strategy employed. Global sourcing is a specific type of international contracting that we addressed in Chapter 13. Answered by PrivateWombatMaster624. 1. Disadvantage: no intern-al knowledge of the market. This systematic literature review. 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. 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. The. The simplest form of entry strategy is exporting using either a direct or indirect method such as an. Strategic alliance. Each mode of market entry has advantages and disadvantages. 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. Royalties What are unique aspect of contractual relationship (5) 1. Besides, wholly-owned subsidiaries are the most usual ownership mode, since we only found four joint ventures. Contractual Entry Strategies in International Business. 38 terms. 14). Learning Objectives. The licensor provides no technical support or assistance in most. 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. First, mature products in a domestic market might find new growth opportunities overseas. Step 3: Studying investment viability. In this chapter, we address various types of cross-border contractual relationships, including licensing and franchising. The respective statements are as follow: 1. This is an example of _____. make it easy for later entrants to win business. #3 Choose a market entry strategy. Licensing as an entry strategy 3. Unique aspects of contractual relationships They are governed by a contract that provides the focal firm with moderate level of control over the foreign. 4 billion. 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. A strategic alliance involves a contractual agreement between two or more enterprises stipulating that the involved parties will cooperate in a certain way for a. What are the two types of business entry modes available into a. 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. Contract Law: Franchising regulations or Company Law as the case may be. The advantages and disadvantages of the market entry strategy are as follows: Advantages. 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. Exporting is the direct sale of goods and / or services in another country. 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). Licensing is a contractual agreement whereby one company (the licensor) makes a legally protected asset available to another company (the licensee) in exchange for royalties, license fees, or some other form of compensation.