Question

When Krispy Kreme decided to expand its operation internationally, it chose to first make its doughnuts available in Canada to minimize its risk. In accordance with the policy of risk minimization, the company sold the right to manufacture and sell its doughnuts to Canadians. In other words, Krispy Kreme used:

a. contract manufacturing
b. direct investment
c. importing
d. a strategic alliance
e. licensing

Answer 1

Answer:

The answer is E.

Explanation:

Licensing is a business arrangement in which one company(Krispy Kreme) authorizes another company(Canadian company) permission to manufacture its product for a specified payment. The benefits for licensing are:

1. To create business opportunities by expansion

2. It makes an entry into foreign market easier

3. It reduces risk for the two parties.