What are the advantages of using licensing as entry mode?
The advantages of a licensing arrangement include:
- quick, easy entry into foreign markets, allowing a company to “jump” border and tariff barriers.
- lower capital requirements.
- potential for large return on investment (ROI), which can be realised fairly quickly.
What are advantages and disadvantages of licensing?
Advantages and Disadvantages of Licensing
| Advantages to Licensing | Disadvantages to Licensing |
|---|---|
| You will not need to incur the costs of producing, promoting, packaging, or selling your product. | You will likely lose control over your product, including promotion, packaging, and selling. |
What is licensing and its benefits?
Often, licensing allows you to generate income without taking on heavy overhead and production costs. Normally, you need to invest considerable resources into generating income from your intellectual property.
What is franchising market entry strategy?
Essentially franchising as a contractual entry mode can be described as a type of licence agreement which means that an organization wants to enter a foreign market quickly with a low degree of risk and resource commitment.
What is the importance of licensing?
Ensuring your company is properly licensed helps to bring protection to yourself, your employees and your customers. Having the correct licence will ensure your personal assets are protected in case of a lawsuit as well as providing protection for you if your business is damaged.
What are the disadvantages of a licensing agreement?
Disadvantages of Licensing
- The licensor having loss of control of their intellectual property.
- The licensor having to depend on the skills, abilities, and resources of the licensee to generate revenues.
- The licensor being exposed to intellectual property theft by the licensee.
Which entry mode is best?
Learning Objectives
| Type of Entry | Advantages |
|---|---|
| Exporting | Fast entry, low risk |
| Licensing and Franchising | Fast entry, low cost, low risk |
| Partnering and Strategic Alliance | Shared costs reduce investment needed, reduced risk, seen as local entity |
| Acquisition | Fast entry; known, established operations |
What are the four market entry strategies?
The most common market entry strategies are outlined below.
- Exporting. Exporting means sending goods produced in one country to sell them in another country.
- Licensing/Franchising. Holiday Inn, London.
- Joint Ventures.
- Direct Investment.
- U.S. Commercial Centers.
- Trade Intermediaries.
What are the three P’s of licensing programs and what do they mean?
manufacturer of licensed products. What are the Three P’s. Protect, Promote, Profit. The Three P’s: Protect. – style guide.
What is the most important step in licensing?
One of the most important elements of a licensing agreement covers the financial arrangement. Payments from the licensee to the licensor usually take the form of guaranteed minimum payments and royalties on sales.
What is an example of licensing?
Examples of licenses include a company using the design of a popular character, e.g. Mickey Mouse, on their products. Another example would be a clothing manufacturer like Life is Good licensing its designs and brand in a certain country to a local company.
What are the advantages of licensing a product?
For a multinational firm, the advantage of licensing is that the company’s products will be manufactured and made available for sale in the foreign country (or countries) where the product or service is licensed. The multinational firm doesn’t have to expend its own resources to manufacture, market, or distribute the goods.
What should I know about market entry strategy?
Allison has a Masters of Arts in Political Science. She has worked in the customer service and food industry since 2013. In this lesson, we’ll learn about market entry strategy by investigating several methods an organization can use to enter a new market. We will look at exporting, licensing, franchising, joint ventures, and more.
How to enter a foreign market through licensing?
Requires a low-commitment to international expansion. Access markets that are closed to imports. Avoid taxes that might otherwise be levied on a product if exported.
What are the advantages and disadvantages of international licensing?
“Assess the merits and demerits of international licensing as a mode of entry into new markets” Disney does not have to produce t-shirts, USB sticks and even waffles with Mickey Mouse’s happy face on it.
