Question

gig-em electronics signed an agreement with small bytes, a computer components company that allows gig-em to use its trademark on its marketing materials. in return, gig-em pays small bytes a royalty of 4 percent of sales over the life of the contract. which type of foreign market entry does this represent? group of answer choices licensing exporting acquisition wholly owned subsidiary

Answer 1

The agreement between Gig-em Electronics and Small Bytes where Gig-em pays a 4 percent royalty for using Small Bytes' trademark is an example of a licensing foreign market entry strategy.

Step-by-step explanation:

The arrangement described between Gig-em Electronics and Small Bytes is known as licensing. In a licensing agreement, one company (the licensor) allows another company (the licensee) to use its trademark, patent, or technology in exchange for a royalty or a fee. This allows the licensee to utilize the brand recognition and technology of the licensor to promote its products or services. The 4 percent royalty on sales paid by Gig-em Electronics to Small Bytes is typical of such arrangements where the licensee is granted the right to use intellectual property owned by the licensor. Licensing is a common form of foreign market entry strategy when a company wants to expand its operations overseas without a significant upfront investment in new facilities or operations.