Final answer:
Contractual agreements are the means of transfer of knowledge in foreign market entry, as opposed to equity transfers in joint ventures or foreign direct investments. These agreements allow companies to expand internationally with lower investment risks. Barriers to entry can either be government-enforced (e.g., taxicab licenses) or not (e.g., trademarks), and international agreements can help overcome trade barriers.
Step-by-step explanation:
In the context of foreign market entry, contractual agreements serve as a means of transfer of knowledge rather than equity. Contractual agreements such as franchising, licensing, and management contracts allow the transfer of knowledge, technical expertise, and other skills across borders without the need for equity stakes. This vehicle of market entry is different from others like consortia, strategic alliances, joint ventures, and foreign direct investments which often involve some level of equity participation and typically assume managerial responsibility.
Contractual agreements are advantageous for companies that wish to expand their market reach without the costs and risks associated with large investments or the creation of new foreign subsidiaries. They offer a flexible approach to internationalization that can be tailored to the specific needs and circumstances of each company.
Self-check question 1 and Self-check question 2 entail classification of barriers to entry. For example, a city passing a law on how many licenses it will issue for taxicabs would be a government-enforced barrier to entry, while a well-known trademark represents a barrier that is not government-enforced.
Concerning research on contemporary problems affecting foreign trade and political relations, issues such as tariffs, protectionism, and international disputes often create such barriers. International agreements and the reduction of trade barriers are cited as counters to these issues, enabling improved relations and economic benefits for nations involved.