Enter Foreign Market through Licensing and Joint Venture

2306 WordsFeb 26, 20189 Pages
After reviewed few literatures about licensing and joint venture, we summarized the findings and results into three subtopics, which are pros and cons of licensing and joint venture, factors affecting the firms for taking licensing and joint venture, and strategies of licensing and joint venture. Pros and Cons of Licensing Licensing can help both licensor and licensee company to save costs. For licensor, it can save the capital expenditure that needs to set up company and acquire equipments. While for licensee, it can save the research and development costs by paying the royalty fees which are generally cheaper than develop in-house. Another advantage of licensing is risk minimization. Instead of doing a new business in an unfamiliar market, it is better for a company to license their products or technology to a company that has competitive advantage in the targeted market. Same for licensee, the products or technology of the licensor have a proven track record that is lower risk than develop a new products or technology. Companies also can learn from each other through licensing. Each party in the licensing will have own competitive advantage. For licensor, it can learn the way of licensee marketing the products. Likewise, licensee can learn the new technology from licensor. However, licensing will increase the exposure of licensor’s confidential. Licensor has to provide training or technical support to the licensee, and thus will expose their secret of success.

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