What is licensing in international business?

It is a business arrangement in which one company permits another company to manufacture its product and sales for a specified payment.

The correct answer is option 1- It is a business arrangement in which one company permits another company to manufacture its product and sales for a specified payment.

Licensing in international business refers to an arrangement between a licensor and a licensee that permits the licensee to use the licensor's intellectual property in exchange for compensation, typically in the form of royalties or fees. This arrangement allows the licensee to manufacture, market, and sell products using the intellectual property of the licensor, often within a specified territory and for a predetermined period of time.

* Permitting another party in a foreign country to produce and sell goods under your trademarks, patents or copyrights in lieu of some fee is another way of entering into international business. It is under the licensing system that Pepsi and Coca-Cola are produced and sold all over the world by local bottlers in foreign countries. Franchising is similar to licensing, but it is a term used in connection with the provision of services. McDonalds, for instance, operates fast food restaurants the world over through its franchising system.