Unit 3.1 Business 2026 explain modes of entry IA1 Prep

What is a mode of entry?

• A business’s long-term plan to increase market share

• The method a business uses to enter an international market

• A marketing campaign to launch a new product

• A financial plan for business growth

Which statement best describes licensing?

• A. A company allows another business overseas to use its brand, product or process for a fee

• B. Two businesses form a new company and share profits

• C. A business sells its operations to a foreign partner

• D. Two firms cooperate on research but stay independent

Why is Boost Juice’s expansion into Asia an example of licensing?

• Boost built and managed all stores itself

• Boost allowed local operators to use its brand and menu in return for royalties

• Boost formed a new joint company with local investors

• Boost partnered with another beverage company for marketing

Which statement best explains why Disney uses licensing?

• To build its own stores worldwide

• To let other companies create products using Disney characters in return for fees

• To sell off unused brands

• To merge with local toy companies

What is a key advantage of licensing?

• High control over branding and pricing

• Low risk and quick market entry

• Guaranteed long-term revenue

• Simple legal agreements and unlimited profit

What is a disadvantage of licensing?

• High start-up cost

• Less control over brand quality and reputation

• Limited access to international markets

• Hard to find local partners

What is the role of an international agent?

• They buy goods and resell them overseas

• They find customers for a business but do not own the goods

• They manufacture products for foreign companies

• They manage all operations in a foreign country

Why is T2 Tea’s overseas model considered a distributor relationship?

• T2 sells directly to customers online only

• Overseas distributors buy products from T2 and resell them locally

• T2 owns all foreign stores and staff

• Distributors pay T2 royalties for using its brand

What is one benefit of using international distributors?

• Access to local markets without building infrastructure

• Guaranteed brand control

• Shared ownership of a new business

• Higher long-term profits

What is a major limitation of using agents or distributors?

• Difficulty finding buyers overseas

• Dependence on local partners for marketing and sales

• High setup and running costs

• Need to share ownership