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Which of the following is an example of a business expanding overseas by management contract? (A) Agreeing to supply a product to an international business (B) Establishing an exclusive distribution channel for an overseas market (C) Purchasing a share portfolio in a number of multinational businesses (D) Providing expertise to a foreign business in return for a percentage of sales - HSC - SSCE Business Studies - Question 7 - 2008 - Paper 1
Question 7
Which of the following is an example of a business expanding overseas by management contract? (A) Agreeing to supply a product to an international business (B) Est... show full transcript
Worked Solution & Example Answer:Which of the following is an example of a business expanding overseas by management contract? (A) Agreeing to supply a product to an international business (B) Establishing an exclusive distribution channel for an overseas market (C) Purchasing a share portfolio in a number of multinational businesses (D) Providing expertise to a foreign business in return for a percentage of sales - HSC - SSCE Business Studies - Question 7 - 2008 - Paper 1
Step 1
Providing expertise to a foreign business in return for a percentage of sales
Answer
The correct answer is (D). A management contract typically involves a company providing expertise and management services to a foreign business. In return, they may receive compensation, which could be in the form of a percentage of sales. This arrangement allows for expansion into international markets while leveraging the local knowledge and framework of the existing foreign business.