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Himont group 8
 

Himont group 8

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    Himont group 8 Himont group 8 Presentation Transcript

    • LICENSING ACTIVITY OF HIMONT By Group 8
    • RENT DIFFUSION EFFECT VS REVENUE Revenue generated should be more than erosion of profit due to increasing other firms As new entrants increases in the industry, the rent diffusion effect increases The licensing is an optimal strategy when condition (i) is satisfied Difference between Revenue vs Rent diffusion is different fo SEFs SEFs are the process technology firm, whereas Himont was downstream product technology firm
    • INVESTING IN TECHNOLOGYSUNK COST A source of revenues R&D funding General Trend- Licensing of old technology (non- core technology) Licensing- A convenient strategy  Revenue Effect vs Rent dissipation effect Licensing the technology in-house:  Firms has distinctive complementary assets in production and marketing  Transaction cost involved in selling or licensing of technology
    • STRATEGY OF LARGE COMPANIES 40-50% licensed from third parties Dow Chemical – acquiring new technology, formed license group DuPont – opening up of 25 specialty chemical businesses Eastman Chemical – formed license unit to sell intellectual property
    • DIFFUSED LICENSING Characteristics of knowledge base General & abstract -> greater division of labour Ease of technology transfer – high degree of codification -> fewer interactions -> ability to reach large markets Emergence of chemical engineering as academic discipline Self-enforcing mechanism
    • HANDLING PROBLEMS OF OPPORTUNISM IN VERTICAL CONTRACTING:Codification Reciprocal continuous know-how - Grant back Difficult for the licensee to invent around the patent Licensing implies lower control on the diffusion of the technology Bundling tacit know-how with codified knowledge protected by patent reduces the problem
    • INCENTIVE COMPATIBILITY OF LICENSING 3 different ways by which licensing can enhance the success of company 1. hidden value of license 2. Increasing competitiveness 3. Stacking out and defending a prop market advantage Arora, Fosfuri and Gambardella (inhouse vs licensing) 1. distinctive complementary assets 2. Degree of competition 3. Nature and importance of transaction cost
    • INCENTIVE COMPATIBILITY OF LICENSING AGREEMENT Win-Win situation for both the licensee as well as licensor Monetary benefits for both the parties Lack of Complementary assets or financial capability were the main reasons of licensing agreement Licensing agreement between SEF’s and downstream companies was mainly business transaction Licensing between existing firms to newer firms was mainly strategic decision