Which one of the following is a Trade related entry mode in international markets?

Question

Question

This question was previously asked in

UGC NET Paper 2: Commerce 29 Sep 2022 Shift 2

Answer 1

The correct answer is Management Contract

Key Points

Management Contracting

Management Contracting is a low-risk method of getting into a foreign market and it starts yielding income right from the beginning.
The arrangement is especially attractive if the contracting firm is given the option to purchase some shares in the managed company within a stated period.
It may obtain the business of exporting or selling otherwise of the product of the managed company or supply the inputs required by the managed company.
A management contract can involve a wide range of functions, such as the technical operation of a production facility, management of personnel, accounting, marketing services, and training.

Additional InformationInternational Licensing

An international business licensing agreement involves two firms from different countries, with the licensee receiving the rights or resources to manufacture in the foreign country.
Rights or resources may include patents, copyrights, technology, managerial skills, or other factors necessary to manufacture the good.

International Leasing

International leasing means a transaction where the lease itself crosses a border i.e, where the lessor and lessee are in different countries.
International leasing provides the lessee with additional flexibility in his use of resources, the ability to better plan his budgets, financial convenience, taxation-proof advantages, risk matching, and flexibility in dealing with replacement decisions in the face of rapid technological change.

Portfolio Investment

Portfolio investment is defined as cross-border transactions and positions involving equity or debt securities, other than those included in direct investment or reserve assets.