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Identify the different types of nonequity arrangements. (Check all that apply.)Multiple select question.Indirect exportingTurnkey projectsJoint venturesLicensingManagement contracts

Question

Identify the different types of nonequity arrangements. (Check all that apply.)Multiple select question.Indirect exportingTurnkey projectsJoint venturesLicensingManagement contracts

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Solution

The different types of nonequity arrangements include:

  1. Indirect exporting: This involves selling to an intermediary, who then sells the products directly to customers in a foreign market.

  2. Turnkey projects: In this arrangement, a company designs, constructs and tests a production facility for a client. Once the project is ready, the project is handed over to the client.

  3. Licensing: This is a contractual arrangement where a firm in one country licenses the use of its intellectual property to a firm in a second country.

  4. Management contracts: In this arrangement, a company provides managerial assistance to another company for a fee. This could include managing the entire operation or specific departments of the operation.

Note: Joint ventures are typically considered a type of equity arrangement, not a nonequity arrangement. In a joint venture, two or more companies share ownership of a new enterprise.

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