Benecol: Raisio's Global Nutriceutical

819 Words Oct 22nd, 2015 4 Pages
Leslie Giscombe
Financial Management Policy/BUS5840
Ana Machuca
June 7, 2015
"BENECOL: RAISIO'S GLOBAL NUTRICEUTICAL"
1. What is required for global product roll-out, including who expends which capital, takes which risks, and reaps which rewards?
Globalization is one of the crucial factors that have impacted the business. Without the proper utilization of the effects of the globalization, it is very difficult for a company to get the competitive advantage. There are many factors that need to be considered before rolling out the product in the global market. The first is to analyze the value chain of the company and to understand and decide on the position where they management wants the company to be into. Then comes the licensing
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In the short-term, the milestone payments represent a known and assured series of cash inflows to Raisio for its intellectual property. Raisio incurs no direct expenses related to these payments; they are simply returns on the intellectual property held by Raisio, and in which it has invested years of capital and intellectual resources to create. On a continuing basis, as Benecol gains wider and wider acceptance and distribution, Raisio would continue to provide all of the stanol estor Benecol’s key chemical ingredient manufactured by Raisio alone assuring a continuing sale at an acceptable transfer price. Note that this is more consistent with Raisio’s traditional core competencies, the manufacturing of industrial chemicals. (By the way, students may be surprised to find that margarine is generally regarded as a chemical product.) Over the life of the agreement Raisio would receive a royalty payment calculated as a percentage of the final retail product price of any product containing Benecol. This is a very attractive element of the agreement to a company like Raisio, as it in no way requires Raisio to be involved or concerned with the variety of different products or ways in which it may finally be distributed. As such, it simply reaps an income stream on the basis of sales, not profitability.
3. What are some of the possible motivations to Raisio and McNeil behind a milestone agreement? Assume the milestone payments are…

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