True / False Questions

1. (p. 305) An overseas operation that is totally owned and controlled by an MNC is a wholly owned subsidiary. 

2. (p. 305) The primary reason for the use of licensing agreements is a desire by the MNC for total control over its products in overseas markets. 

3. (p. 310) A joint venture is an agreement in which two or more partners own and control an overseas business. 

4. (p. 312) A license is a structural arrangement in which domestic divisions are given worldwide responsibility for product groups. 

5. (p. 312) A franchise is an agreement that allows one party to use an industrial property right in exchange for payment to the other party. 

6. (p. 315) Franchising provides the franchisor with a new stream of income and the franchisee with a time-proven concept and products that can be quickly brought to market. 

7. (p. 317) Companies in the mature stage of international business involvement are the most likely to adopt an international division structure. 

8. (p. 318) A disadvantage of the international division structure is that it separates a firm’s domestic and international managers, which can result in two different camps with divergent objectives. 

9. (p. 318) A structural arrangement in which domestic divisions are given worldwide responsibility for product groups is referred to as a global area division structure. 

10. (p. 319) Firms that pursue a global product division structure typically have products that are in the maturity stage of the product life cycle.