ib licensing

8/12/2019 Ib Licensing

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MODE OF ENTRY INTO

FOREIGN MARKETS

LicensingSampada Adarkar

Priti BangarMangesh Joshi

Gaurav Kawale

Tushar Kedar

Priyanka Kharkar


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DEFINITION

Licensing it is a method of foreign market entry,that is based in an agreement between aninternational company (the licensor) and

another company abroad (the licensee).

ParentCompany

Foreignaffiliates

Patents,

Trademark,

Manufacturing process

Know-How.


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The Impact of Entry Barriers

The non-exporting modes of entry basically

represent alternatives for the firm when entry

barriers to a foreign market are high.

These entry barriers involve not only artificial

barriers such as tariffs, but also involve lack of

knowledge of the foreign market and a need tooutsource the marketing to local firms with

greater understanding of the market.


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Mode of entry : Difference

STRATEGIC ALLIANCE (J.V.)

Home country

LICENSING

Blueprint : how to do itHost Country

A joint Venture


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ELEMENTS

Royalty

Patents

Trade-mark

Copy-right

Know-how

Especifi-cations

Qualitycontrol

Blue-print


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CHARACTERISTICS

Effectiveway for theinternati-

onalization


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TYPES OF LICENSEAGREEMENT


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xamp e: r g na qu pmenManufacturing(OEM)

A company enters a foreign market by selling its

unbranded product or component to another

company in the market country

Examples:

Canon provides cartridges for Hewlett-

Packards laser printers

Samsung sells unbranded television sets ,microwaves, and VCRs to resellers such as

Sears, Amana, and Emerson in the U.S.


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Good alternativeto small company Fast market access

Low costinformation

Ability to take acompetitiveadvantages

No requiring alarge capitalinvestment

Attractive to firms

that are new to theinternational

business arena.

ADVANTAGES


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LICENSING AS A FOREIGN ENTRY

CHOICE


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The following brands which most of us have heared of

brands

McDonalds to use chota bheem brand for

promoting their DESI LOOK (2013)

Have you seen Angry Bird Characters on thebaby cloths???


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Film Industry Indian Superhero

Expected to generate Rs 18-20 crore

via sales of branded

merchandise, licensed onlinegames etc.

Four animation films will bereleased on Cartoon Network

to generate buzz Hathway/Reliance TV Service

Providers are licensee of

various channels and movies


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Fashion Industry

Licensee In India


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Concepts: Licensee & Licensor


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Creation of futurecompetitors

Marketingunderperformance

may not becontrolled

Passive interactionwith local market

Limited flexibilityto apply

sophisticatedtechnology

The licensee couldcreate problemsfor the licensor

It can damage thelicensors

reputation.

DISADVANTAGES


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CONCERN OF FOREIGN

LICENSING


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Local Marketing Control

The local marketing can be controlled to varying degrees, quite

independent of the entry mode chosen. The typical global firm

maintains a sales subsidiary to manage the local marketing.

Examples:

Marketing Control

Mode of Entry Independent

Agent

Joint with

Alliance

Partner

Own Sales

Subsidiary

Licensing Disney in

Japan

Microsoft in

Japan

Nike in Asia


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SOME

QUESTIONS

BEFOREPREPARING A

LICENSEAGREEMENT

Whichproduct?

Whatterritory?

TheCurrency

Geographical

limitation?

Durationand

cancelation

Whichright?

Salesperforman

ce

Franchising Licensing


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Franchising Licensing

Governed by: Securities law Contract law

Registration: Required Not required

Territorial

rights:

Offered to franchisee Not offered; licensee can sell

similar licenses and products in

same area

Support and

training:

Provided by franchiser Not provided

Royalty

payments:

Yes Yes

Use of

trademark/logo:

Logo and trademarkretained

byfranchiserand used byfranchisee

Can be licensed

Examples: McDonalds, Subway, Dunkin

Donuts

Microsoft Office

control: Franchiser exercise control over

franchisee.

licensor does not have control

over licensee


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CASE STUDY

A quality product is one that meets the requirements of itsuser. For example, a motorcyclist would want to purchase a

helmet that had met tough road safety tests.

BSI (British Standard Institution) is an independent, non-

governmental organization that offers product testingand certification services as part of its business.

For example, in the motor vehicle industry, certificates are

required by European bodies for a variety of components for

new road vehicles. BSI helps UK motor manufacturers bytesting and certifying that their products meet the required

standards. Some of the products that BSI tests for the UK

motor industry include vehicle lighting, vehicle glass, motor

cycle helmets and electronic equipment.


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BSIK itemark

BSI Case Study

BSI is also the owner and operator of the well-knownKitemark. This is an independent and highly recognizedsymbol of trust and safety in the UK and some countriesaround the world.BSI runs a number of Kitemark schemesfor various products and services as wide-ranging as lighting,

fire extinguishers, 13 Amp plugs and motor cycle helmets. The Kitemark schemes are voluntary, so it is the

manufacturer or service provider's choice to go through theassessment process to gain the Kitemark. This clearlydemonstrates that themanufacturer or service provider is

committed to delivering a safe and quality product thatmeetsthe standards set.

The Kitemark is the symbol that gives consumers theassurance that the product conforms to the appropriate

British, European or International Standard.


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A Kitemark means BSI has independently tested theproduct and that it conforms to or exceedsthe criteria ofthe relevant British Standard. BSI issues a BSIKitemark license to the companyto use the Kitemark.The manufacturer pays for this service. This is only thestart of theKitemark process. The product is tested andthe manufacturing process is assessed at regular intervalsfollowing the issue of the license.

The Kitemark is the symbol that gives consumers theassurance that the product conforms tothe appropriateBritish, European or International Standard. It should

therefore be safe andreliable. Manufacturers do not bylaw have to display a Kitemark on their products, butmanydo because it encourages consumers to buy anddemonstrates the company's commitment to producingsafe quality products


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EXAMPLES

Walt Disney Company:Almost alltoys arebased on popular

movies and televisionshows are licensed

from their inventors.

Board game: Boardgames from popularcompanies such asHasbro are often

licensed from theircreators.


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THANK YOU

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