9. Licensing
• Licensor issues a license to a foreign
company to use manufacturing
process,TM, patent etc for a fee or
royalty
• License gains production expertise or
brand name
• Licensor has less control over the
licensee than over its production and
sales
• Risk of creating a competition
10. Licensing
• Management contracts
Manage businesses for free
• Contract manufacturing:
Hires local manufacturers to
produce the product
• Franchising :
Offers complete brand concept
and operating system
12. Share ownership and
control
License
The foreign firms might lack the
financial, physical, or managerial
resources to undertake the venture
alone
Partners may disagree over investment,
marketing, or other policies.
Can prevent international company from
carrying out specific manufacturing and
marketing policies
14. A foreign company can:
License
buy part or full interest in a local
company
build its own manufacturing or service
facilities
15. Advantage
s
• The firm secures cost economics
• The firm strengthens its image in the
host country
• The firm deepens its relationship
• The firm retains its full control over its
investment
• The firm assures itself of access to the
market