- 1 Marks
BMIS – L1 – SA – Q7.3 – Strategic direction
Question
Company X manufactures a product for which it has world-wide patent rights but sells it only in its own country. It sells to a foreign company, Company Y, the right to make and sell the product in its own country. This form of business collaboration is:
A a licensing agreement
B a franchise agreement
C a strategic alliance
D a joint venture
Answer
A
Explanation:
This scenario describes a licensing agreement, where Company X grants Company Y the right to produce and sell the patented product in Y’s country, typically in exchange for royalties or fees. Licensing involves transferring intellectual property rights without joint ownership or management. Option B is incorrect because a franchise agreement typically involves a broader business model, including branding and operational guidelines, not just patent rights. Option C is incorrect as a strategic alliance involves cooperative efforts without necessarily transferring rights. Option D is incorrect because a joint venture entails shared ownership and management of a new entity, which is not described here.
- Tags: Business collaboration, Franchise, Joint venture, Licensing agreement, Strategic alliance
- Level: Level 1
- Uploader: Samuel Duah