principles of marketing chapter 8 quizlet

To summarize, in this foreign market entry mode, a licensor in the home country makes limited rights or resources available to the licensee in the host country. Instead, licensing usually means taking advantage of an existing company’s pipeline and infrastructure in exchange for a small percentage of revenue.Īn international licensing agreement allows foreign firms, either exclusively or non-exclusively, to manufacture a proprietor’s product for a fixed term in a specific market.

It’s a fast way to generate income and grow a business, as there is no manufacturing or sales involved. Licensing generally involves allowing another company to use patents, trademarks, copyrights, designs, and other intellectual in exchange for a percentage of revenue or a fee. This low cost, of course, is coupled with lower potential returns, because the revenues are shared between the parties. The multinational firm doesn’t have to expend its own resources to manufacture, market, or distribute the goods. Most companies consider this market-entry option of licensing to be a low-risk option because there’s typically no up-front investment.įor 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. Although the multinational firm usually has no ownership interests, it often provides ongoing support and advice. The licenser is normally paid a royalty on each unit produced and sold. Under a licensing agreement, the multinational firm grants rights on its intangible property to a foreign company for a specified period of time. The possibility of licensing makes for a flatter world, because it creates a legal vehicle for taking a product or service delivered in one country and providing a nearly identical version of that product or service in another country. Licensing is defined as the granting of permission by the licenser to the licensee to use intellectual property rights, such as trademarks, patents, brand names, or technology, under defined conditions.

Licensing is a business arrangement in which one company gives another company permission to manufacture its product for a specified payment. Licensing gives a licensee certain rights or resources to manufacture and/or market a certain product in a host country.

explain the advantages and disadvantages of international licensing.

After reading this section, students should be able to …

Principles of marketing chapter 8 quizlet