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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) Providing expertise to a foreign business in return for a percentage of sales.
This option represents an example of a management contract, where a business provides its expertise to manage or operate a foreign entity in exchange for a share of the profits, typically a percentage of sales.
The other options do not fit this definition:
- (A) simply entails supplying a product, which does not involve management.
- (B) focuses on distribution, not management.
- (C) involves investment rather than management services.