Licensing,FranchisingandotherContractualStrategies finalc

Licensing,FranchisingandotherContractualStrategies finalc -...

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Licensing, Franchising and other Licensing, Franchising and other Contractual Strategies Contractual Strategies
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Learning Objectives Learning Objectives 1. The nature of contractual entry strategies in international business 2. Licensing 3. Advantages and disadvantages of licensing 4. Franchising 5. Advantages and disadvantages of franchising 6. Other contractual entry strategies 7. Management of licensing and franchising
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The nature of contractual entry strategies in international business Cross border exchanges where the relationship between the  focal firm and its foreign partner is governed by an explicit  contract. This also shares six different characteristics  some  of those characteristics are: Governed by a contract that provides the focal firm a  moderate level of control over the foreign partner. For an ex.  This type of an agreement specifies the rights and obligations  for both partners as in operations, and a strategic resources  of a foreign venture. Typically involve exchange of intangibles and services. For  ex. A firms exchange Include technical assistance and know- how. Can be pursued independently for ex.  Firms can engage in  contractual agreements as an alternative way of responding  to international opportunities.
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Other contractual Entry  Strategies Turnkey Contracting- Arrangement where  the focal firm or a consortium of firms plans,  finances, organizes, manages, and  implements all phases of a  project abroad  and then hands it over to a foreign  customer after training local personnel. Management Contract- Arrangement in  which a contractor supplies managerial  know-how to operate a hotel, resort,  hospital, airport, or other facility in  exchange for compensation
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LICENSING LICENSING
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A licensing agreement specifies the  nature of the relationship between the  licensor (owner of Intellectual  Property) and the licensee (the user).   High technology firms routinely  license their patents and know-how to  foreign companies. Intel has licensed  the right to a new process for  manufacturing computer chips to a  chip manufacturer in Germany.  
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Royalty Royalty A fee paid periodically to compensate  a licensor for the temporary use of its  intellectual property; often based on a  percentage on gross sales generated  from using the licensed asset.
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Fixed amount Fixed amount Covers the licensor’s initial costs of  transferring the licensed asset to the  licensee, including consultation,  training in how to deploy the asset,  engineering, or adaptation.  However,  certain types of licensable assets,  such as copyrights and trademarks,  have much lower transfer costs. 
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Licensing,FranchisingandotherContractualStrategies finalc -...

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