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!