Which of the following is a disadvantage of the international business strategy of licensing?

A) It subjects the original firm to high transportation expenses.
B) The profits of a firm using this strategy are limited to those it receives from royalty payments.
C) It allows a firm to enter a foreign market in high-risk conditions.
D) The costs of licensing are quite high and must be borne solely by the original firm.

Licensing

Involves one company granting its permission to another company in a foreign country to manufacture or market its products in its local market.

Royalty Payments

Financial payments made to copyright or patent holders, or to the authors of works based on the sales or usage of their creations.

International Business Strategy

A plan that guides commercial transactions between entities in different countries, including market entry, marketing, and operational strategies.