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Licensing: A mode of entry into foreign markets
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MODE OF ENTRY INTO FOREIGN MARKETS
Licensing
Catalina Hernández BocanegraJohan Andrés Tique Uribe
DEFINITION
Licensing it is a method of foreign market entry, that is based in an agreement between an international company (the licensor) and another company abroad (the licensee).
Parent Company
Foreign affiliates
Patents,Trademark,
Manufacturing process Know-How.
ELEMENTS
Royalty
Patents
Trade-mark
Copy-right
Know-how
Especifi-cations
Quality control
Blue-print
CHARACTERISTICS
Effective way for the internati-
onalization
R&D
Reduce risk of Expropriation
Less capital
or
managem-
ent time
Millions of dollar with little effort
Attractiv
e to be
internati
onal
ability to acquire
reciprocal benefits
TYPES OF LICENSE AGREEMENT
When
there is a
technolog
y or a
product
that is
going to
be
shared.
making of
provisions
for
technology
sharing as
it evolves
during the
lifetime of
the
agreement
.
Good alternative to small company Fast market access Low cost
information
Ability to take a competitive advantages
No requiring a large capital investment
Attractive to firms that are new to the
international business arena.
ADVANTAGES
LICENSING AS A FOREIGN ENTRY CHOICE
Creation of future competitors
Marketing underperformance
may not be controlled
Passive interaction with local market
Limited flexibility to apply
sophisticated technology
The licensee could create problems for the licensor
It can be damage the licensor’s reputation.
DISADVANTAGES
CONCERN OF FOREIGN LICENSING
SOME QUESTIONS
BEFORE PREPARING A
LICENSE AGREEMENT
Which product?
What territory?
The Currency
Geographi-cal
limitation?
Duration and
cancelation
Which right?
Sales performan-
ce
EXAMPLES
Walt Disney Company: Almost all toys are based on popular
movies and television shows are licensed
from their inventors.
Board game: Board games from popular companies such as Hasbro are often
licensed from their creators.
THANK YOU!
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