International Business Page 3
Licensing And Franchising:
Many companies enter into international licensing agreements, allowing other countriesaround the world to use their assets (ie: trademarks, patents, copyrights, or expertise) under contract, receiving royalty payments in return. Similarly, many companies engage in franchising,a mode of business where the franchisor allows the franchisee to use a trademark that is anessential part of the franchisee's business.
Gloria Vanderbilt hasfranchised her name out to several clothing companies, forming the Gloria Vanderbilt line
.The franchisor also assists on a continuing basis in the operation of the business-for example, by providing components, management services, and technology.
Turnkey Operations And Management Contracts:
Companies also pay fees that may be incurred on an international level for engineeringservices handled through turnkey operations and management contracts. A turnkey operationinvolves construction of facilities, performed under contract, which is then transferred to theowner when the company is ready to begin operating. Management contracts are initiated whenone company supplies personnel to perform general or specialized management functions for another company.
This is most evident in Disney's theme parks in France, Japan, andChina.Direct And Portfolio Investment:
Finally, international business occurs within direct and portfolio investments. Byinvesting in a foreign company, the investor takes ownership in a foreign property for a financial