DISSERTATION_How is the licensing for manufactore of 1

How is the licensing for manufacture of branded products
currently being handled and how is licensing develop in the future?
Studies of manufacture and selected branded product.
THIS DISSERTATION PRESENTED TO THE
UNIVERSITY OF WALES, INSTITUTE CARDIFF
LONDON SCHOOL OF COMMERCE
IN PARTIAL
FULFILLMENT OF THE REQUREMENTS FOR
THE DEGREE MASTER OF BUSINESS ADMINISTRATION
IN INTERNATIONAL BUSINESS
STUDENT NUMBER: 07000064
STUDENT NAME: Sergey Polousov
Dennis Adcock, Dissertation Supervisor

NOVEMBER 2007
DECLARATION
This work has not previously been accepted in substance for any degree and a
not being concurrently submitted in candidature for any degree.
Signed …………………………………………… (Sergey Polousov)
Date ……………………………………………
STATEMENT 1
This work in the result of my own investigation, except where otherwise
started. Where correction services have been used, the extern
and nature of the correction is clearly market in footnotes.
Other sources are acknowledged by footnotes given explicit references. A
bibliography is appended.
Date ……………………………………………
STATEMENT 2
I hereby give consent for my work, if accepted, to be available for
photocopying and for interlibrary loan, and for the title and summary to be
made available to outside organisation.
Date …………………………………………
2

Abstract
I have presented and expected to find in my dissertation, using certain recourses, how is
licensing for manufacture of branded products currently being handled
and how is licensing develop in the future, including technology for
manufacture and technical production, recognized brand name, the right to
use curtains patent, the "know-how", like experienced foundation to
organize entry into licensing business and probably to launch my own
licensed small size manufacture company in the future in Special
Economic Zone, named “Kaliningrad”, using geographical, business law,
tax broken advantages for SEZ “Kaliningrad” and huge potential Russian
market, during developing my licensing business strategy .
Also, I have compared licensing industrial experiences, political, economical,
governmental regulations, and cultural barrier and customer demands
in two contrasting areas:
A. Hong Kong, where is the best economical and environmental platform for a good
start to develop licensing business;
B. New and limit experienced Special Economic Zone, named “Kaliningrad”, with
slowly developing business structure where presents a positive licensing business
example with potential opportunities for developing licensing in the future.
The above observations have led to the origins of this study. This research starts by
describing the essential features of the licensing strategy with environmental factors and
identifying a working definition for licensing for manufacture, brand management,
small manufacture company in licensing business and technology for them, like specific
example for licensing manufacture, licensing agent, and case study, which would hold
true for the literature discussion and the finding.
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In the summary, I wish to find answer for questions, how is licensing for manufacture
of branded products currently being handled and to find the strategy and tactical steps
to enter into licensing business on practical case, like foundation for licensing a
Manufacturing Company, oriented to the Russian market.
Some professional licensing consultancy has got sceptical opinions about entering
new players, like small size company into licensing business following to stereotype
"you are small and have got not enough muscular for that one " and Russia is non-
stability country, full of business surprises. Four years ago I was started my MBA
program from zero pointed English and completed 38 years old.
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Acknowledgments
The licensing for manufacture of branded product has been my high
dream idea, which has been growing for eleven years experience,
based on export/import operations in European market, especial in
Germany and Poland. This is the main reason, which gives me
foundation for discovering the huge international licensing area in a
global business world. But this situation would not possible without
the support of my friends and colleagues, who was working with me
for several years in International market.
I should like to express my deep gratitude to all professors and
administrative staff of UWIC and LSC, personally to Professor Geoff
Lancaster who has stimulated my enthusiasm at some stage of
stressful time in my life and for the support he has provided during
my studies, specially to my Dissertation Supervisor Dennis Adcock,
who really recommended using my owner brain and to Course
Leader Dr.Ragenda Kumar for their support, valuable advices
during the time that I was planning, developing, writing and
completing this dissertation.
Finally, I thank to the most important people in the world, my family
and personal friends, from Special Economic Zone "Kaliningrad"
who has been sending me loads of necessary details for Case Study
and always has been willing to support me for realising all my
dreams in my dissertation.
Thank you and God speed.
5

Table of Context
I – INTRODUCTION……………………………………………. p 8
1.1 Introduction …………………………………………………... p 8
1.2 Research background ………………………………………… p 9
1.3 Rational for the chosen topic ………………………………… p 12
II - LITERATURE REVIEW …………………………………. p 15
PART 1
2.1.1 Introduction
2.1.2 Global international strategy of licensing
a) Western Europe
b) Eastern Europe
c) Asia
2.1.3 Licensees strategy ………………………………………… p 20
2.1.4 Environmental factor ……………………………………… p 20
a) Political conditions
b) Economic conditions
c) Governmental Policy
d) Law regulation
e) Distribution methods
f) Cultural aspects
g) Market size
h) Media conditions
I) Infrastructure
j) Seasons
2.1.5 Licensing for manufacture …………………………………
p 23
2.1.6 Licensing technology for manufacture of small companies p24
a) Acquiring technology
b) Technology Rights
c) Identifying Licensees
2.1.7 Brand management and selected branded product ………… p26
2.1.8 Image of branded product …………………………………. p27
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2.1.9 International licensing agent ………………………………. p27
PART 2
2.2.1 Case study of the licensing manufacture in “AVTOTOR” …… p29
Company
2.2.2 Key factors
a) History of the growth
b) “Does not mater what you know, very important who you know”
c) “KIA” is going to leave, but “AVTOTOR” will not lose”
d) Corporation game or “slowly developing business law in Russia”
III - RASEARCH METHODOLOGY ……………………….. p 35
3.1 Research philosophy ………………………………………... p 35
3.2 Research approach ………………………………………….. p 36
3.3 Research objectives ………………………………………… p 38
3.4 Data collection methods ……………………………………. p 39
a) Secondary Data
b) Primary Data
c) Interviews with members of the Local Government in Special
Economic Zone“Kaliningrad”, Russia
d) Questionnaire for the Licensees and for the Licensors
IV - RESULT & ANALYSIS …………………………………… p 46
4.1 Data analysis ………………………………………………….. p 46
4.2 Presentation of the result ……………………………………… p 47
V – CONCLUTION ……………………………………………… p 48
5.1 Limitation of the methodology ………………………………… p 48
5.2 Summary of the results ………………………………………… p 48
5.3 Recommendation
BIBLIOGRAPHY
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I - INTRODUCTION
1.1 Introduction
Licensing traditionally stays outside of business crowd, but crosses many separate
categories of industries and so all types of these categories are licensed, including group of
manufactured properties, education, media, medicine, sports, publishing and so on. All
types of properties cross borders of international markets and develop technologies in e-
commerce and open up new categories of products and change the technology over.
Licensing sectors is a small segment of the market, like as art and music and sports, but
the corporate sector has the largest component of the licensing business. Licensing covers
of property types and product categories and variety of company objectives and licensing
programs support the licensor and licensees to improve corporate goals, strategies and
licensing right.
Since 1990s, retailers have had difficult experience in new business environment. Retail
buyers have had a tendency to support a few licensees at a time and have expected
weighty promotion from licensees and licensors and have achieved some sort of exclusive
rights.
Now the licensing business is global. The Licensing Letter has informed that retail sales
of licensed products, goods and services up to $108 billion in 2005. (Licensing letter
Symposium, EPM, www.epmcom.com)
Each section of licensing industry is differing in its objectives and property characteristics.
This dissertation presents a systematic approach where I aim to develop my own licensing
strategies. This dissertation provides information on the base of licensing. It is not very
easy to describe step-by-step technique about developing a licensing program.
The dissertation is based on the knowledge of licensing professional experts and
introduced the illustration in literature review potential strategies for licensors and
licensees, case study and interview, through the research methodology. The below
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observations have examined the details of licensing, legal protection, and international
licensing strategy.
In addition, the dissertation includes the Chapter of Result & Analysis where I describe, as
clear as possible, my realistic wishes on organising a licensing business.
This dissertation is aimed at providing a useful contributions to companies in the
successful licensed businesses by using effectively the licensing technique and tools for
satisfaction needs to make licensing workable with maximum profits in the new opening
developing licensing market.
1.2 Research background
The approach of this dissertation is based mainly on academic business strategy concepts
and up to some extent of Operation Management, Marketing, Finances and HRM. To
suggest and critically analyse what business strategies would be necessary to introduce
successful study of manufacture and selected branded product, is practically impossible
to unify criteria, when the description of strategy is discussed among experts in the field.
"A set of analytic: for understanding and influencing a company's position in the market
place..." (Kay, J. A., 1996, The Business of Economics, Oxford University Press)
A strategy always forms an integral part of the business plan, which is an essential tool to
give direction to the enterprise in this case specifically in licensing for manufacture of
branded products and how is licensing developed in future. It is easy to confuse what the
widely known marketing strategies like; publicity campaigns to strength brand image or
promote new destinations with real business strategies, where they have more
opportunities of licensing manufactory standardizing the fleet to an specific model of
licensing.
As the legendary Herb Kelleher, former CEO of South West used to say: “Keep it Simple!”
(R.A. Moran, 1994, p. 25)
With many different regional approaches styles differing from the original model the basic
idea, outsource secondary activities, like maintenance, accountancy, etc. be possible to
reduce the prices of goods where they will be accessible for a massive market creating an
economy of scale, that compensate for the tiny profit margins in every item sold.
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This research is still in the frame of proposal dissertation, how licensing for manufacture
of is branded products currently being handled and how is licensing develop in the
future:
 I have started by describing the essential features of the Global international strategy
of licensing in Western Europe, Eastern Europe, Asia and focused on to practical
licensing strategy for licensees with compared licensing industrial experiences and
environmental factors, including political and economical conditions, governmental
policy, law regulation, distribution methods, cultural aspects, market size, media,
infrastructure and so on.
 Observed the examples of licensing industrial experiences and customer demands from
contrasting successful market in Hong Kong, where is best economical and
environmental platform for licensing business.
 Identified a working definition for licensing for manufacture, brand management
and image of branded products based on manufacturing non-exclusive products,
executive licensing for small manufacture company and focused on technology like
specific example for licensing manufacture foundation on phenomena idea "finish
manufacture" like higher-end products and used more advanced technology while so
practical and productive in Hong Kong.
"… As many smaller firms have tried entering the market. The advantage of the fragmented
nature of the industry is that it gives opportunity for small players to exist and grow." BEACON
EQUITY RESEARCH, Investment Research Report Analyst: Varsha Chitale, CFA, Inc. (WYDY) 2005
 Also analysed the Operation function international licensing agent, case study from
new and limit experienced Special Economic Zone, named "Kaliningrad", with
developing business structure, where is presenting a positive licensing business
example, as cars manufacture "AVTOTOR", with potential opportunities for
developing licensing in the future on huge Russian market which would hold true for
the literature discussion and the finding.
In the summary,
I have expected to find out in my dissertation the answer for question how is licensing for
manufacture of branded products currently being handled, including technology for
10

manufacture and technical production, recognized brand name, the right to use curtains
patent, the “know-how”, strategy and tactical steps to enter in to licensing business on
practical case, like experienced foundation, for organising in the future the access into
licensing business on the model of my own small size Manufacture Company. That
company will be oriented to the Russian market in Special Economic Zone, called
“Kaliningrad” applying geographical factors, business law, tax broken advantages for
SEZ “Kaliningrad” and huge potential of the Russian market, during developing my
business strategy, based on licensing.
It is very important to declare that Russia is one of the biggest markets of goods in the
world and it is almost entirely covered by imports. The Russian manufacture position of
industry cannot compete with imports or satisfy market demand alone. To improve a
market, Russian manufacturers are looking for partnership with American and European
companies to enable them to manufacture high quality, well-designed products with
reasonable prices. As the market developed, Russian consumers become more particular,
and they began looking for better quality fashionable goods Well-known European
companies, well recognized brands. However, local producers are currently not in any
position to fill market’s demand, and Russia will have to continue importing their goods.
Two types of goods are in demand in the market today: mass-market and cheap, low-
cost goods.
The Russian market has the potential to become the one of the largest markets in the
world, so in the near future the significant growth of industrial manufacture and
consumption can be expected. It will allow to a good businessmen to analyse how is the
Licensing for manufacture of branded products will currently being handled in Russian
market and how is licensing will develop in the future in emerging and developing market,
like Russia.
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1.3 Rational for the chosen topic
Dr. Peter McGee from School of Technology and Management, London, has notified:
"Sergey, if you do your dissertation on the chosen topic and complete it successfully, I
will shake your hand, because it is such a big issue, what I can call “headache”.
I have still remembered those words. I know how it is difficult, but I wish to do that!
The licensing for manufacture of branded product has been my old idea. It was born
several years ago, when my friends and colleagues and I were operating on export/import
business in East and West European market, focused on importing food and goods from
Germany and Holland, using European seaport Hamburg, Lubek, Copenhagen,
Amsterdam, Klaipeda and Riga.
We have used tax broken advantages in Russian Special Economic Zone, named
“Kaliningrad”, where I come from.
Graph N 1. Map of Kaliningrad
(http://encarta.msn.com/map_701513578/Kaliningrad.html)
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Kaliningrad locates between Poland and Lithuania and has major trading Baltic seaports
and so important without common aboard with main Russia territory, but this zone is
regulated by the Russian common business law for Special Economic Zone. SEZ’s
legislation gives possibilities for exporting the demanding products, such as vodka, etc.,
mostly to Russia and Ukraine, across Poland and to small separated parts of Lithuania and
Poland too. Importing vodka in to Russia and East European market? – Yes.
My partner from economic zone “Klaipeda” has registered company in Great Britain, with
branded name of vodka. The branded names of vodka are “RICHMOND” and
“KRISTAL”. Both of them have been produced at rented factory in Belgium and
Germany. Then vodka has exported to the East European market.
Phenomenon of the business idea is the Western brand name, excellent design, high-
level quality, and good reputation of manufacture country and tax-free tariff for import
to Special Economic Zone “Kaliningrad”. And after that, the opening of the door in to
the huge Russian market is more uncomplicated.
Slowly developing business law in Russia, changing from times to times political
situations, including governmental regulations, increasing corruption and bureaucratic, and
protection racket, the combination of all of describing factors above, has given me many
questions on how and where I can establish a successful business.
I have always thought, how is possible to organize a manufacture of well-known goods in
new environment and in new stability market. I have tried to found some opportunities for
that. On my own business way I have read and remembered through whole my life the
famous slogan:
"Problems cannot be solved at the same level of awareness that created
them"
Albert Einstein
And I have discovered the same by myself.
Only the MBA program, only Great Britain, the accumulation of the best knowledge at
the different colleges and Universities, only the best experience in international
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communities of business people, all of them together, have given me all necessary
advantages to do business in Global International market professionally.
Therefore, the outcome of these reasons would help me to develop a business on strategic
model of organizing a successful licensing for manufacture, probably with new brand
name and taking advantages in future. This reason gives me basis for discovering the huge
international licensing area in a global business world, during my study in London. This
research is a result of the growing need for case studies to help bridge the gap between
theory and practice. It is hoped that it will help to clarify the role which licensing for
manufacture of branded products can play in enhancing corporate performance and
develop in the future.
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II - LITERATURE REVIEW
PART 1
2.1.1 Introduction
First reference on licensing was appear in the 1770s, "Saintbury Chemical Fluid for the
Obliteration of Marks on the Skin" saw an upturn in sales thanks to the endorsement by
the Right Honorable Countess Dowager of Spencer and Jersey.
Since the 1930s there has been an important development in the theory and practice of the
licensing business. In the 1930s Herman "Kay" Kamen secured the licensing rights to
Walt Disney properties. Since that time contemporary licensing became very important
thing in business strategy of the company and started making its mark.
White (1990, p. 5) has stated that:
“Licensing is the process of leasing a legally protected (that is, trademarked or copyrighted)
entity known as property which could be a name, likeness, logo, graphic, saying, signature,
character or a combination of several of these elements, in conjunction with a product or a
product line”.
The research on the handling and developing of the licensing for the manufacture of
branded products, in different markets, such as Western European market, Eastern
European market and Asian market, will be based on academic articles and textbooks,
moving through theory to the existing market.
A number of case studies are concerned directly with specific aspects of licensing.
Licensing is used by brand owners to extend a trademark or character onto products of a
completely different nature. Brand licensing is well-established, both in the area of patents
and trademarks. Basically non-material activities, such as patents, copyrights, trademarks
and logos are licensed.
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Frequently, companies allow other enterprises exclusive rights to use assets that are
essential to the production of a finished product. Licensors then receive
royalty payments, which consist of a percent from the sales of the product
having the special license.
Raugust (1995, p. 116) has defined and analysed licensing as:
"Licensing is usually based on a contractual agreement between two business entities: the owner
or agent of the property, also known as the licensor and the renter of the rights, and the
prospective licensee who is usually a manufacturer. The formal permission to use the owner's
property is subject to certain terms and conditions, such as a specific purpose, a defined
geographic area, and a finite time period”.
There are many different areas where modern licensing is used, including biotechnology
industry, pharmaceutical, software, energy and environment driving technology, university
licensing trends and assuring Royalty Compliance in High Technology licensing.
Licensing is an industry that now produces more than $15 million
worth of retail sales every hour.
Graph N 2.The world licensing business worth of goods and services, 1982-2005.
Graph N 2, which shows the licensing business value of goods and services in billion
American dollars as vertical axis and years 1982-2005 as horizontal axis.
16
0
10
20
30
40
50
60
70
80
1982 1984 1985 2005
• In 1982, the licensing business worth of
goods and services$13.6 billion
• In 1984 up to $26.7 billion
• In 1985 increase to $50 billion
• In 2005 only US/Canada has worth of
retail sales $71.2 billion
• Total number in 2005 is $108.4 billion

Licensing industry most of dynamic growth and developing business in
the world. Source: The Licensing Letter: ERM Communications
At the present time there are thousands of goods available as licensing opportunities and
hundreds of agents and owners representing them. Produce licensed product lines is
possible by manufacturers of all consumer product category. New epoch gives a lot of
opportunities for development on the specific field as licensing and becomes an essential
part of the company's strategic promotion plans or new business development.
2.1.2 Global international strategy of licensing
There is no single correct strategy for licensing in a global level. Each property differs to
many attributes and adaptations in other countries. There are still more other factors that
are necessary to consider at licensing.
Everyone involved in licensing business should be legally safe in all countries where their
rights can be broken. Licensors should register copyrights and trademarks in each country.
Owners of the property should count expenses and profit on registration of the trademark
on everyone to the country and these charges can be divided among partners.
Licensing methods now are analogous, but there are distinctions in features of each
market. Strategy can be similar for each property in different territories though assembly
of a product, the plan of distribution, quantity and other details are vary. Licensors make
the program so to have time in each country, but at the same time support image of the
commodity mark at a global basis. Royalties and guarantees also converge all over the
world with little changes. Unimportantly where the international licensing is conducted,
but it demands a patience and flexibility.
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a) Western Europe
Licensors accept the European program of licensing as introduction of euro has simplified
book keeping and export, and persons having the patent can serve all market. But it is
necessary to know, that Europe is made of the distinguished markets. Each region is
different and it is necessary to consider it separately.
Parallel import of a product of the foreign manufacturer is identical maiden by the person
having the patent create an unattractive competition for licensors. Licensors cannot
interfere with this, but having the patent for one or several markets, dictate appropriate
language, specifications and characteristics, which limit competitiveness, and carrying out
financial penalties. Licensors can prevent parallel import and will choose new persons for
the patent if old manufacturers do not observe a wish.
Industrial features change from country to country. There is no such thing as the exclusive
right in Europe. It is a small company having the patent is capable to the European
distribution. Languages also change from country to country and have impact to the
patent, pickings and specifications of a product.
Licensing product that has a ready sale in Scandinavia, actually cannot work in Italy while
the property, which is popular in France, never can successfully cross border to England.
For example the toy industry is concentrated in the Great Britain and France. The West-
European countries make the biggest sales of licensed goods in the Great Britain.
Germany, France and Italy, also dominate over the licensing market. Europe represents
one of the diversified and developed markets of licensing in the world.
b) Eastern Europe
Eastern and Central Europe, including the Commonwealth of Independed States, are still in
their infancy as licensing markets. (Karen Ragust (2007, p.187))
The Eastern Europe is still in the childhood of licensing industry. Economic is growing,
but an industrial infrastructure is improving slowly. It is nearly try but in fact;
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Licensing Car Manufacture Company "AVTOTOR " has operated in Special Economic Zone
named "Kaliningrad" from 1997 year and capital investment in capacities for all previous period
has had more than 250 million US dollars.
(Official Website of "AVTOTOR" company. www.avtotor.ru/company)
There are a lot of business people who interested in the patent, but "know-how" lack in the
capital and the new equipment. Bad legal protection, a monetary and credit system,
economic and political strikes, the big black market, everyone brings, as well, their
contribution to difficulties for licensors.
Licensors are approaching to the Eastern Europe in the different ways. Some of them have
established branches. Others are included into the market through joint ventures with the
local companies and another has used licensing agents working in region. The market is
not advanced very well and also grows slowly.
c) Asia
Licensors consider China in particular way as a new growing market, but the
governmental always interrupts in to industries and try to regulate the rules and legislation
for that. Complicated infrastructure and political problems between China and the West do
licensing is very problematical.
But another hand China has different example, using phenomenal principle " One
country – two system ".
"Hong Kong is an excellent choice for companies to start developing their licensing business.
For Western companies, the business structure is very stable, the economy is good and the
English-speaking population here makes doing business a little bit easier than trying to enter the
mainland on their own. So it's a great platform." LIMA president Charles Riotto.
Southeast Asia consists of quite a few different countries, including Singapore, Thailand,
Indonesia, Malaysia, the Philippines and etc., some of which find the licensed trading very
attractive and some less so. The smallest countries have small population and territory;
those factors are doing licensing for manufacture very expensive.
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Economic and political situations contrast from country to country and falsification is
difficult for supervising, especially in Thailand. Many infringers work in these countries
selling the goods in the local markets and exporting them in the USA, Russia and Europe.
2.1.3 Licensees strategy
Licensing manufacture expands the geographical borders. Many of these companies join
those, which have global popularity and appeal. Other persons having the patent work with
connection local, regional and properties. Companies tend to have the world distribution,
hats, footwear and spirits, a fashion. Some companies of clothes have global licensing.
Small company having the patent even if it is capable to take the world rights, really have
global or even regional distribution and have strong presence at some countries. Therefore,
the persons having the patent of the owner work with local distributors, sublicenses or
subcontractors.
Licensors search for distribution as key criterion in selection of the person having the
patent for specific territory. At the same time the person having the patent can use the
license in additional regions.
2.1.4 Environmental factors
If the property is popular the licensor should study in specific features of region before
start of the program of licensing. Expansion in the given territory cannot be worthy if too
many factors speak against success.
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Recommendation check list of the important item for licensors can include following:
a) Political conditions
Political situation including wars, elections, border disputes, revolts or revolutions
conducts to changes in a business environment, which mentions licensing, for example it
are South America, the Near East and the East Europe
b) Economic conditions
Economic forces inflations, high taxes and fluctuations of currency have influence on
levels of the income just as on types of products.
c) Governmental policy
Trading agreements and contracts within the limits of the European Economic
Community, Asia or Latin America, the licensing decision, the duty of import and tariffs,
changes of laws of trade, all this directly influences licensing.
d) Law regulation
Legal processes in some countries take away a lot of time. All these considerations
increase probability of falsification and dictate frameworks of time necessary for input in
the property.
The similar countries such as Denmark have strong laws concerning unfair competition
that can mention communications.
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e) Distribution methods
Methods of distribution change among territories, thus learning above what types of
retail sellers dominate over.
The western methods of distribution are not feasible everywhere, presence of the black
market and his ability to pump over sale from lawful retail sellers important at in other
territories.
f) Cultural aspects
Regional tastes define, what types of properties and the goods will succeed in the country.
The licenses popular in France not necessarily succeed in Germany, Italy and Latin
America. For example, books of Comics is quickly developing industry in Japan, but
actually nonexistent in Israel.
The publication is very important in Europe is explains more incomes of licensing than all
other categories of the goods incorporated for some licensors, but has less importance in
Latin America.
g) Market size
The number of inhabitants of region mentions potential commercial levels so does
population density, an increase in population and demographic factors such as quantity of
children. The geographical size also influences decisions of licensing.
h) Media conditions
The status of the publication, broadcast and cable television, the Internet and film-
manufactures within the limits of region helps to define the plan of marketing. The certain
considerations include total of outputs of mass media and their size of an audience; the
quantity of advertising and what environment involves, whether outputs in mass media are
privatised; how many screens of cinema exist; or global mass media such as cable.
22

I) Infrastructure
Force of an industrial basis within the limits of region, mentions ability of the licensor to
give rights on the local persons having the patent. If instruments of the service and
technological abilities are obsolete and licensors can find worthy import, instead of
internal persons having the patent. The condition of systems of transportation mentions, as
is effective the persons having the patent can distribute the goods; the status of
telecommunications influences marketing and daily business actions
j) Seasons
The southern hemisphere has weather samples opposite to those in northern hemisphere. It
is hotly in the south when it is cold in the north. It mentions schedules of marketing, such
as attire, accessories, footwear.
Times of a vacation change, each area has its own holiday, which mentions business
schedules and peaks selling seasons. In a southern hemisphere, summer holiday and
Christmas imposing which concentrates toy sales even more during that period of holiday
than, take place in other areas.
2.1.5 Licensing for manufactory
Licensors should define, whether the master will make manufacture or through the
subcontractor having the patent or products will be imported. Many owners of the property
recommend visiting capacities.
If the third party will address with manufacture, the Licensor should demand so a lot of
information on that company as far as possible to establish, that it is capable to satisfactory
work. Licensors should make sure also, the person having the patent and his branches can
execute the expected requirement.
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Manufacturers also have the help in the form of licensing of representatives of
manufacturers or advisers. These companies work with the persons having the patent to
identify and get corresponding licenses. Similarly to agents, they have examination and
contacts and specialize in licensing on the basis of full working week. Manufacturers
should show attention to other aspects of their business and frequently not have time or
adequate staff, completely to concentrate on purchase of licenses or managements of
attitudes of licensing.
2.1.6 Licensing technology for manufacture of small companies
The "Not-Invented-Here" syndrome, the classic resistance to new ideas that was so
widespread only 20 years ago, has now been replaced by a new focus on alliances and
partnerships, with corporations recognizing the competitive need to find and use the best
technology regardless of its source. (Robert Goldscheider and Alan H. Gordon (2006, p 201))
Classical resistance to new ideas, which so widely has been distributed long time ago, now
is replaced recognizing competitive needs to find and use the best technology irrespective
of its source.
The small companies also now recognize the opportunities submitted by a new
environment and they also persistently search for new technologies from external sources.
a) Acquiring technology
The finished and semitinished products arrive in Hong Kong for Final assembly before
being reexported. Such reexports are growing more rapidly than domestic electronic
exports. Primary products for export include consumer electronics, electrical
machinery, and electronic components. As more assembly plants move to China, local
Hong Kong manufacturers are focusing increasingly on higher-end products that make
use of more advanced technologies. (Hong Kong Business (2005p 30))
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The small company can be rather attractive as the person having the patent for a wide
variety of owners of technology. Many individual inventors worries their swallowed
invention lost within the limits of the big company. They are involved in attitudes with a
small company in which their invention could present the big share of the future growth
and they will probably negotiate directly with the chief manager or the close partner.
Small company cannot have necessary financial resources, industrial ability, or wide sales
and the organization of marketing to maintain completely the technology offered for the
license and as cannot have sufficient funds to undertake the extensive program of
development or the long-term clinical studying required commercialise new technology.
Even after negotiations begin with the owner of technology, the small company still,
probably, needs to address to some unique problems by search to get rights of the license
for new technology.
For example, Licensor has the patent of the property. Probably it is necessary to accept
narrow opportunities of the license than the big company. As alternative a small company
can negotiate to receive at least non-exclusive rights in these areas. However, the small
company can wish to offer the Licensor interest of the action as repayment to lower the
earned or minimal Royalties or can even suggest creating branch in common taking place
in the property to maintain technology.
b) Technology Rights
Many of small companies become Licensors because they lack resources, both financial
and human, to bring their new invention to realization.
The small Licensor of the company with the limited resources can prefer to negotiate
concerning the big payments, which can be invested repeatedly in its basic business even
if it means to recognize lower long-term returning from technology.
Precisely as, if the prospective person having the patent the big company, and the
technology is not applicable to the current business of the small company, the small owner
of technology of the company can wish to sell technology directly to provide additional
25

funds, to invest the capital in its current business, even that this sale can throw potentially
profitable long term stream of royalties.
c) Identifying Licensees
The first step during licensing should identify the companies, which could be interested in
operation of new idea or the invention. The small company should address to this problem
of a choice creatively and with open opinion.
The optimum person having the patent could be the company that does and sells similar
products or serves the same market, or it could be rather various companies, which could
use idea to improve its own product.
The big companies are susceptible to licensing of completely advanced products. They
frequently prefer to rely on their own departments of research.
The small companies are frequently more susceptible, but frequently they do not presume
to themselves an expense, that commercialese new technology .The most critical element
to estimate in selection of the person having the patent force of sales and the organizations
of marketing, and especially shown ability of that organization to define and grasp the
markets for completely new products.
2.1.7 Brand management and selected branded product
Licensors risk dissolving his authority of commodity mark. It is also dangerous to patent
the property to the inappropriate manufacturer. The potential person having the patent who
is known to do low qualitative products will not become the manufacturer of qualitative
products.
Licensors also supervise the image an image of their properties, choosing the persons
having the patent who will be capable to keep that an image. The guide of style and other
tools are useless, if the person having the patent is not capable to performance of work.
26

The following responsibility of the Licensor as soon as it has chosen the corresponding
persons having the patent will be to adjust effective approval of a product, process and
follow it diligently. Quality check is a prime factor in maintenance of the property.
Licensors approve the goods in several items during the industrial list, usually considering
conceptual figures or models, samples of reproduction and samples of manufacture.
2.1.8 Image of branded product
The potential persons having the patent should be convinced, that authority of commodity
mark of the property by clients feel, that it is one with which they want their product and
the connected company. The high quality mark can change their strategy and start to
distribute low appreciated products, thus dissolving mark in opinion of consumers and the
person having the patent.
At the new literature Karen Ragust (2007, p.222) has defined Brand as following:
"1) A property that, over time and with significant investment, has gained value among
consumers and is perceived by consumers as having a consistent image or message. 2) Often
used by licensors to refer to any property, especially one positioned as a current or future
evergreen."
To quote from the same author Karen Ragust (2007, p.222)
"Brand identity/ Brand image is the perception, on the part of consumers, that there is a single image joining
all products under one brand name. Usually enhanced by consistent packaging, labelling and point-of-purchase
materials."
2.1.9 International licensing agent
International licensing agent or international sub-agent is a main key to enter in to local
area where doing a licensing business. International agent operates local business
expertise, contacts with Licensees in the region and information about local customs. In
case of trust between the Licensor and the agent, a history about types of the property, last
experiences Licensors, typical strategy the agent and the plan concerning the property, a
covering of the agent geographical areas or a network of colleagues, number of properties
27

for business, structures and services, well information from the persons having the patent
and licensors who worked with agency.
The set of agents of licensing works in each territory, with the most active areas of
licensing, the big range of agencies uses in United Kingdom, for example, while Russia
them little bit which specialize in licensing. In some countries, such as Japan, it is essential
to employ the local agent or the person having the patent of the owner. In Western or the
East Europe the agent of the owner sometimes support local in each country or region.
The more levels of agents, the less each agent receives from the full commission as the
typical international payment of the agent should be shattered between Licensor and sub-
agent in each territory.
As has more put licensing takes in repeated territories and as business of licensing began
more complex, the role of the international agent has changed. The most part of agent's
work is in the habit to consist of sales of the rights to the persons, having the patent in his
attitudes sub agent with all members of business in each country are important as its
contacts to manufacturers. In some territories, such as Europe, there was a consolidation
between agents as the companies merge or are bought by networks or manufacturers.
Information about international licensing agent: A Status Report, EPM Communications.
28

PART 2
Case study of the licensing manufacture in "AVTOTOR" Company
a) History of the growth
Car Manufacture Company "AVTOTOR " is located in Special Economic Zone named
"Kaliningrad". A capital investment in capacities for all previous period has had more
than 250 million US dollars.
There are three car manufacture terminals in the Company. Car terminal manufacture №1
has capacity number of 15 thousand autos in one year. In 1997 here under the licensing
agreement with the South-Korean Company "КIA Motors" and manufacturing cars,
such as Magentis, Opirus, Carnival Spostage, has been produced. The car models are
shown in the following picture. In the beginning of manufacture, on May 16, 1997, it was
collected more than 25 thousand cars. (Official Website of "AVTOTOR" Company.
www.avtotor.ru/company)
Graph N 3. "AVTOTOR"'s cars.
29

In October 1999 after carrying out of the big complex of civil and erection works at a
factory started to manufacture the serial output of "BMW" automobiles of 5th
and 7th
models.
In 2002 was finished all works on start-up of shops of welding and painting of automobile
bodies, which have allowed removing a factory on a new high-quality level. The car's
manufacture was completed.
In June 2002 from the Kaliningrad conveyor has left the 5,000th
"BMW" avtomobile and
at the end of August 2002 – 10,000th
car of "КIА". In 2002 the gain of manufacture was
16,3 %, including of "КIA" - 25 %. In 2002 car's manufacturing Company "AVTOTOR"
still was the leader in manufacturing of well-know world brands cars in Russia.
From 10,600 foreign cars, collected in the country in 2002, 5,800 autos or 55 % have
been made by Kaliningrad "AVTOTOR" Company. In July 2003 the monthly volume of
manufacturing autos first time exceeded over 1000 items.
In February 2001 "AVTOTOR" became the first Russian automobile enterprise awarded
with International certificate TUV MANAGEMENT SERVICE for introduction in
manufacture of system of quality according to requirements DIN EN ISO 9002.
In May 2002 in Paris the anniversary Gold prize "For quality", annually awarded by the
European publishing group "Club of leaders of trade" handed the enterprise. On
December 19, 2002 in Paris Company "AVTOTOR" was awarded with "Gold medal
SPI", the founded Association of assistance of the industry of France, in a nomination:
"For dynamical development and high quality of the goods and services"
On August, 27, 2003 "AVTOTOR" and " GENERAL MOTORS " signed the
cooperation agreement within the framework of which in Kaliningrad up to the end of
2003 it is supposed to begin assembly of car "Hammers - 2", and in 2004 to expand a
spectrum of in common made production due to new brands auto and also petrol and
diesel engines.
30

It is necessary to note, that the decision "GENERAL MOTORS" to use opportunities
"AVTOTOR" for realization of strategy of promotion of the models on the perspective
Russian market was quite natural. The corporation could take advantage of the unique
experience "AVTOTOR", capacities practically ready to work, qualified personnel and a
highly professional team of heads and experts. On the other hand, signing in August 2003
licensing agreement with "GENERAL MOTORS", allowed "AVTOTOR" the excellent
chance to continue development of the capacities and to speed up return of investments
due to release of widely known off-road car.
Next project of "AVTOTOR" and "GM" was releasing of whole family of
"Cadillac" models.
"AVTOTOR" is not engaged directly distribution, only rendering "GM" CIS assistance
in work with corporate clients. With a view of acceleration of realization of the project the
decision on use basically of a working infrastructure of a factory was accepted. It is
necessary to note, that even earlier training of experts was carried out on headquarters
plant "GM" in the USA. Questions of technical adaptation of automobiles to the Russian
conditions and them under the European standards are simultaneously solved. Complex
enough circuits of financing of the project, insurance, logistic are developed. "GM" CIS
to create good demand for family of these automobiles in the Russian market, to optimize
a price policy and once again to draw attention of potential corporate Russian buyers to
"GM" brands.
About correctness of chosen policy by "AVTOTOR" speaks also that fact, that in Russia
only this year it will be made foreign cars of domestic assembly of 180 thousand units.
Expected increase in their manufacture by 2010 - up to one million automobiles one year.
And "AVTOTOR", as one of 6-ти such domestic assembly manufactures is the leader in
this industry.
31

b)"Does not mater what you know, very important who you know"
(Dr. Ragenda Kumar, Case studies HR, STM, London, 2007).
The General manager of the manufacture company "AVTOTOR" is Sherbakov
Vladimir, PhD, the Professor of the Russian Academy of natural sciences.
In 1990, he was the 1st assistant of Russian Prime minister.
In 1991 Sherbakov V. created the International Investment Fund in Russia
Graph N 4. "AVTOTOR"'s General Manager.
(Official Website of "AVTOTOR" company. www.avtotor.ru/company/persons)
"AVTOTOR" company has been visited by the prime minister of the Russian government
Michael Kasyanov, who highly has estimated achievements of the factory in the area of
production's quality.
The Minister of economical development and trade of Russian Federation, Herman Gref,
has noted successful experience of manufacture Company "AVTOTOR".
c) "KIA" is going to leave, but "AVTOTOR" will not lose
In Russian newspaper "Kommersant" has published the interview, given by Valery
Sokolov, the chairman of board of directors of "AVTOTOR-HOLDING" Company.
("Коммеrsant", (Moscow), № 017, 1.2.2006, Page20. Ekaterina Safonova took Interview).
Sokolov has stated that "AVTOTOR" is the most versatile car factory in Russia: you let
out auto of five brands, from German up to Chinese, with different depth of assembly.
16,5 thousand the autos released in 2005.
32

 The plan of manufacture in 2006 was 45 thousand automobiles per year. It is a
huge jump for such company, as "AVTOTOR".
 In his opinion, "KIA Motors" behaves not in a market way. Actually "AVTOTOR"
has resulted this brand to Russia and long time bore the charges connected to
promotion. If "KIA Motors" decides to stop manufacture in Kaliningrad, it is right,
because "AVTOTOR" from this point will not lose.
He has described a lot of plus for large investors, such as "Toyota" or "Ford". For small
investors there are more than minuses, for example, for those who would like to engage in
manufacture of accessories: engines, boxes of transfers, etc.
Коммеrsant (Moscow), № 017, 1.2.2006, Page20
Interview taken by EKATERINA SAFONOVA
d) Corporation game or "slowly developing business law in Russia"
In connection with occurrence recently in mass-media and resources the Internet of a
unreliable information about activity of group of companies "AVTOTOR", the Board of
Directors has considered necessaries to declare that the question is attempt to exclude
manufacture of automobiles in conditions of Special Economic Zone, named
"Kaliningrad".
Using an administrative resource and not civilized methods of competitive struggle,
competitors have tried to achieve acceptance of amendments to the Decision of the
Government of the Russian Federation № 184 from 31.03.2006. This document regulates
the list so-called "simple operations". It is not changing a condition of the final goods and
insufficient to count the goods made in the Kaliningrad area.
The law "Foreign investments into the Russian Federation" № 160-ФЗ from 09.07.1999
gives foreign investors the state guarantees from adverse change of the legislation of the
Russian Federation. In case of acceptance of amendments, the Government of the Russian
Federation will break the guarantees given by these laws.
Attempt to change the Decision of the Government of the Russian Federation and put it
back can to cause negative economic and political consequences. Such decision will lead
to a stop of manufacture of automobiles "BMW", "General Motors", "KIA" and other
33

marks. Also it can loss more than 5000 workplaces, to the termination of tax deductions in
budgets of all levels, loss mullions-strong, including foreign investments, to serious
undermining of trust of foreign investors to the legislation of the Russian Federation and
the given state guarantees of protection of investments and the rights of investors.
All this, in turn, will generate essential doubts in stability of a legal and economic climate
for conducting serious business in Russia.
Board of directors of group of companies " AVTOTOR "
34

III - RESEARCH METHODOLOGY
3.1 Research philosophy
Before the idea of my research on licensing for manufacture of branded products emerged,
I had a term for what philosophers used to call research as a logical reasoning and how
two major logical systems, the inductive and deductive methods of reasoning, are related
to the research.
To describe my research methodology the following procedure will be used:
a) To set out the theoretical outline of my research and
b) To fit my own research methods, my practical work, into that framework.
My methodology is based on the research process “Onion”, proposed by Saunders, Lewis
and Thornhill in their book research Methods for Business Students pp. 83. I have
determined that the research philosophy to be utilized will be a blend of Interpretism and
Positivism because the political, social, economical and environment issues to be
analysed.
Interpreting the international licensing challenges to offset their trading strategy in new
international markets will be reviewed through an Interpretism perspective. Also,
Positivism has a participation because interprets the nature of people’s behaviour.
Positivism is a rejection of metaphysics.
It is a position that holds that the goal of knowledge is simply to describe the phenomena
that we experience. The purpose of science is simply to stick to what we can observe and
measure. Knowledge of anything beyond that, a positivist would hold, is impossible. In a
positivist view of the world, science was seen as the way to get at truth, to understand the
world well enough so that we might predict and control it. The world and the universe
were operated by laws of cause and by effects, which we could discern if we applied the
unique approach of the scientific method. Based on the results of our studies, we may
learn that our theory doesn't fit the facts well and so we need to revise our theory to better
predict reality. The key approach of the scientific method is the experiment, the attempt to
discern natural laws through direct manipulation and observation.
35

Other kind of research philosophy that has been described as a phenomenology. This
approach includes the acceptance the complexity of the social world involved in carrying
out global licensing.
According Denscombe, (2003) phenomenology is an approach that focused on how life is
experienced (ibid, p.97) and that research 'involves a detailed description of the experience
that is being investigated' (ibid, p.l0l). More specifically, he has concluded that
'researchers who use a phenomenological approach need to be explicit about their own
way-of making sense of the world and, in order to get a clear view of how others see the
world, they need to suspend (or bracket off) their own believes temporarily for the purpose
of research (ibid, p.l02)
3.2 Research approach
In order to approach the above-mentioned research objectives, the study is taking into
account both qualitative and quantitative research strategies often necessary for
‘triangulation’ – meaning ‘getting a fix from two or more places’ (Green et al; 2002, pg
45). Triangulation refers to the use of different data collection methods within one study in
order to ensure that the data is telling you what you think they are telling you. (Saunders et
al, 2003). The triangulation approach strives to capture a more complete, holistic, and
contextual portrayal of the phenomena under study, and is intended to neutralize bias in
any one approach applied (Green et al.; 2002, pg 23)
The original concept of triangulation is used in surveying, navigation and military
strategy, where the basic idea is to establish the position of a point from observations
taken from other points. In social science the concept is used metaphorically as a method
of using multiple sources and methods to collect information on and analyse some social
phenomenon.
We often refer to the two broad methods of reasoning as the Deductive and Inductive
approaches.
 Deductive reasoning works from the more general to the more specific. Sometimes
this is informally called a "top-down" approach. We might begin with thinking up
36

a theory about our topic of interest. We then narrow that down into more specific
hypotheses that we can test. We narrow down even further when we collect
observations to address the hypotheses. This ultimately leads us to be able to test
the hypotheses with specific data.
 Inductive reasoning works the other way, moving from specific observations to
broader generalizations and theories. Informally, we sometimes call this a "bottom
up" approach.
Considering the unique business strategy as licensing for distributing manufacture of
branded products, this management report has adopted both an Inductive and Deductive
research approaches, which are concerned with the context in which the research is
conducted. Deductive, because the existing concept of licensing and its impact on
branding and business decisions and strategy is first tested using data and Inductive
because the data collected is analysed to give new dimensions to the licensing concept and
its strategic effect on licensing to Manufacture branded goods.
Quantitative and qualitative research will be applied using primary and secondary
information that will be gathered and assembled specifically for this study. Qualitative
secondary information from a variety of sources will be gathered.
According Massey (1999), Strauss & Corbin (authors of "Basics of Qualitative research:
Grounded Theory procedures and Techniques) define Grounded Theory as a qualitative
research method involving an inductive approach moving from the specific to the more
general) where the data is not determined by the theory, but the theory is develop from the
data. However, since the data from which a theory can be developed can only be
conceptualised data, concepts are still the key elements of analysis. The rational for
Grounded Theory is therefore to keep in mind what makes the subject of a study unique
and open ended, rather than simply viewing it as an objective set of variables preset under
an existing theory.
This was done in my dissertation to describe and compare licensing advantages and
disadvantages, different issues arising from technical, political and geographical risks
involved in different countries.
37

3.3 Research objectives
The starting point of this dissertation a business strategy to incorporate successfully to
analysing how is the Licensing for manufacture of branded products currently being
handled and how is licensing develop in the future.
Its competitive environment and the role played by other participants like competitors,
regulation agencies, suppliers and the possible market. In order to accomplish this analysis
is necessary to formulate the adequate questions that lead to create a better understanding
of the business environment and what factors contributed to create it. What strategies were
taken in the past by some entrepreneurs trying to introduce this model to Manufacture?
How some environmental factors like; taxes, regional economic recessions or instability,
devaluations and obsolete regulations have affected the industry? What has been their
impact in Manufacture? What is the difference with other brands that manage to survive
and even grown and consolidate positions? Why their business strategies are more
successful than others in the same environment?
The main goal of this dissertation is a Business Strategy to introduce successfully process
of licensing works with relevance to licensing for Manufacture of branded goods. In
order to achieve this analysis, the research will include a panorama giving an introduction
of the Manufacture Industry in the present and continuing with an analysis using some
academic analysis tools and finally as a logic step an evaluation of opportunities and
threats in this environment how the first can be used and the second overcome.
The following are some of the most significant research objectives considered in this
dissertation:
 To examine the way in which the process of licensing works with relevance to
licensing for Manufacture of branded goods;
 To determine the importance of terms and conditions within licensing agreements.
It is increasingly being realized that terms and conditions within a licensing agreements
are incredibly important. The study will look closely into terms and conditions of license
agreement, the fees they have to pay, their rights for distribution and redistribution under
the terms and conditions and license provider’s copyright statements.
38

To discuss of the influence of government regulations on organizations is looking for as a
way, which provide licensing for Manufacture of non-exclusive branded products.
The research will analyse the impact of government regulations and licensing laws on
organizations. Licensing laws are slowly being relaxed in most countries and licensing as
phenomena is spilling over to various industry sectors previously immune to the concept.
3.4 Data collection methods
The strategic element of the research process is the data collecting method. Hague &
Jackson (1998) have pointed that 'there are various types and techniques of data collection,
with the most fundamental division between desk (secondary research and field-work
(primary) research (ibid, p.9).
Primary, secondary and tertiary (books) research was used to explore the subject of this
dissertation.
a) Secondary data
In this section I describe and explain how the topic of my investigation was studied. First
of all, this research has been carried out by collection the secondary data.
According to the theory, secondary data is information collected, and evaluated, from
secondary sources often generated for purpose other than meeting the objectives of the
current study. Secondary data is therefore collected from sources such as journals,
newspapers, official statistics, books and other published materials. These sources are
accessible from public, academic, company, and specialist libraries, the Internet, on-line
databases and other electronic media.
The secondary data collection and review of literature has been carried out in my research
largely from college and other kinds of libraries, like a British Library (which located near
King's Cross underground Station), for published materials. Unfortunately, I could not use
39

the electronic materials from Library of University of Wales Institute, Cardiff (UWIC).
The reason was not providing training to access to electronic database of the Library.
Sources have been included Reference books (existing literature on licensing, literature of
the past few years has been studied to figure out the change in licensing practices over the
years and how organizations have adapted to that change), the Licensing Journals, the
Newspaper, for instance, such as Russian "Kommersant", the Licensing Letter, the
Licensing Report, Licensing Show International, Brand Licensing London.
The sorts of books and articles utilised have been mainly on the topic as the "Licensing for
manufacture" and "Brand management". This research uses references from General
Manager, the Chairman of Board of Directors, representatives of the "AVTOTOR"
Company, the Minister of economical development and trade of Russian Federation,
former CEO of South West, LIMA president and a doctor of philosophy Ragenda Kumar.
Another source of information has been the case study of Car Manufacture Company
"AVTOTOR" Company, in Special Economic Zone, called Kaliningrad, Russia. Some
images have been used to show the kind of the world licensing business worth of goods
and services. Image of cars and people, involved in "AVTOTOR" activities, have also
been used to make some of the terms and points are understandable.
The theoretical and practical perspectives and the insights of different authors and
companies provided by these books and articles have been very useful in helping to
examine the importance and significance of the various business strategies, using licensing
for manufacture of branded products and how is licensing develop in the future.
After collecting and analyzing data from critical review, the primary data was carried out
to complete my dissertation. Secondary and tertiary data proved to be very valuable.
b) Primary data
Primary data is information collected first hand which is not available in the form of
secondary data. Collecting such data involves various methods such as observation,
experimentation, survey and fieldwork. Principal fieldwork techniques include postal
research and phone and face-to-face interviews. Because these techniques can be very
40

costly and time-consuming, secondary data research should always be conducted prior to
primary research.
In my Proposal I have noticed that, since the possible primary data collected would be
interviews or questionnaires sent to the decision makers and organizations related, but it is
very unlikely that they would respond, not primary data is planned to be collected,
consequently a sampling method to collect primary data is not considered for the proposal.
Secondary Data, such as statistics, forecasts, regulations and opinions from experts, case
studies, etc ... would be collected from specialized information sources like related
Business Magazines, Business Strategy Journals, electronic databases, Licensing
regulatory agencies' websites, etc ...
Also, I have mentioned that Primary data will be collected using “online-questionnaires”
(Zikmund, 2000). For this purpose, a convenience sample of customers will be surveyed.
In order to reduce possible biases and ensure data reliability, a more representative sample
of the overall population will be taken. The population will be distributed across the globe
and industry sector. Ideally, the researcher would have liked to interview personnel
concerned with licensing decisions, but due to lack of resources and time, online
questionnaire were considered more appropriate. Response rates of online questionnaires
are usually very low; the researcher would make use of his contacts from across the globe
to ensure good response.
A combination of data collecting methods, involving semi-structured and unstructured
interviews, e-mailed questionnaires, and non-participant observation and acquired
documents, have been used in the proposed dissertation. These data collection methods
can be seen as competing with each other. The data collection was carried out in a variety
of ways and all the methods were prioritised. Sometimes the methods were combined to
produce differing but mutually supporting ways to collect data. This has involved practical
work, such as interviews, discussions, letters, e-mails and telephone calls to members of
the local Government at SEZ "Kaliningrad".
The interviews have been conducted with predetermined list of questions, although, prior
to the interview, a clear idea to study needed to be established. Following such a data
collection methods, interviews were given an opportunity to talk freely about licensing,
41

but on the frame of recommended topics. The interviews have included several topics,
such as:
 How many companies is working at the present moment in Kaliningrad with the
licensing agreement;
 What countries are issued licensing agreements;
 Which difficulties the licensing companies are faced in Kaliningrad;
 Were these companies are supported by Government
 Why there are a small numerous of existing licensing companies.
According to definition, an unstructured interview is an informal type of interview
aimed at exploring in depth a general area. A questionnaire is a structured sequence of
questions designed to draw out facts and opinions from respondents and to provide a
method of recording a data. (Hague & Jackson, 1998).
Semi-structured interview are, however, non-standardised and have a list of themes or
questions to be covered. The order of the questions varies depending on the flow of the
conversation. During the process, additional questions may be developed. Data will be
recorded either by note taking or type recording the conversation (Saunders, Lewis and
Thornhill, 2003)
The collection of primary data has involved a wide-ranging use of telephone, post and
Internet facilities and subsequent responses. This work has been planned to fit into
relevant ant fruitful information, based on licensing. First of all, a list of subjects that
needed to be covered, a list of people who needed to be approached, the plan of work for
the whole investigation, and related notes and correspondence have been created.
c) Interviews with members of the Local Government in Special
Economic Zone "Kaliningrad", Russia.
This dissertation has proposed commencing with one of the types of telephone interview,
if interviewees were available for telephone interview. Some interviewees contacted by
telephone.
42

Telephoning interviewees was costly method of obtaining information. These has been
prepared to ask people specific questions concerning existing companies, working with the
licensing agreement, about facing difficulties, and why licensing is using with a small
number of existing licensing companies.
The disadvantages of conducting interviews by telephone – the lack of personal contact
and establish trust – have been compensated for by the speed of data collection and lower
costs associated with long-distance access.
In all, two people from local Government in Special Economic Zone "Kaliningrad, Russia
were been interviewed. They were Sergey Kyznesov, the Assistant of the Minister of
Economy (contact telephone number is: (007 4012) - 59 – 93 - 45) and Liana Maximova,
the Assistant of the Head of International Communication Department (contact telephone
number is: (007 4012) - 59 – 90 - 86). Their experience and facts and figures from their
practice needed to be collected and analysed in order to reach conclusions and
recommendations in the presented dissertation.
All interviews are aimed to be between a half hour to an hour, and a schedule of the
questions will be prepared in advance to guarantee the clear direction of research on all the
areas to be covered during the conversation. However, the interviews have not strictly held
to schedule of questions given the nature of informant interview discussed earlier.
d) Questionnaire for the Licensees and for the Licensors
For the primary data collection two types of questionnaire were created, during the
researching on the presented dissertation, to accompany the chart, presented above.
The first questionnaire is about general questions to aimed on all groups of managers,
involving in licensing business. There are following:
 What does Licensing mean?
--------------------------------------------------------------------------------------
 How is licensing business paid for?
--------------------------------------------------------------------------------------
43

 What kinds of risks are in licensing industry?
--------------------------------------------------------------------------------------
 What type of responsibilities licensing players have got?
--------------------------------------------------------------------------------------
 How to compose the licensing contract?
---------------------------------------------------------------------------------------
 How is possible to regulate the financial impact on licensing business?
---------------------------------------------------------------------------------------
 Where can company found licensing partners?
---------------------------------------------------------------------------------------
 Are all of licensing agreements exclusive?
The second questionnaire is about responses, which can be the Licensees and the
Licensors interested in. The proposed questionnaire in following chart shows it.
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W h e re c a n I fin d a lic e n s in g a g e n t ?
H o w c a n I s e ll m y p ro p e rty ?
W h a t s ta g e s a re in v o lv e d in u p to lic e n s in g p ro g ra m ?
H o w m u c h c a n I m a k e fro m lic e n s in g b u s in e s s ?
Q u v e s tio n s fo r L ic e n s o rs
H o w is p o s ib le to
g e t a lic e n s e fo r
te c h n o lo g y fo r a s m a ll s iz e
m a n u fa c tu re ?
H o w d iffic u lt is to s ta rt
lic e n s in g b u s in e s s w ith
H o n g K o n g lic e n s in g
a g e n t ?
W h e re c a n I fin d lic e n s in g a g e n t ?
H o w to s ta rt th e
lic e n s in g b u s in e s s ?
I a m a o w n e r o f a s m a ll m a n u fa c to ry a n d n o n
e x p irie n s e d L ic e n s e e . C a n I s ta rt lic e n s in g
b u s in e s s ?
W h a t k in d o f h o t lic e n s e s a re e x is tin g fo r
s m a ll m a n u fa c tu re s ?
W h e re c a n I fin d in fo rm a tio n a b o u t a n
o w n e r o f th e p ro p e rty a v a ila b le fo r b u s in e s s ?
Q u v e s tio n s fo r L ic e n s e e s
Q u e s tio n n a ire
fo r
lic e n s in g m a n a g e rs
45

IV - RESULTS & ANALYSIS
4.1 Data analysis
Using extensively both Qualitative and Quantitative data it was aimed in this research with
a big part of the work allocated to interpret them and relate within the objective of the
project.
The manufacture business is monitored with a set of standardized quantitative indicators
that show its performance based on things, such as:
 Examination of the way in which the process of licensing works with relevance to
licensing for Manufacture of branded goods;
 Determination of the importance of terms and conditions within licensing
agreements;
 Discussing of the impact of government regulations on organizations looking to
provide licenses for Manufacture of their branded products;
 Assessing of the cost and profitability implications for organizations looking to
license;
 Examination for the difficulties faced by organizations with licensing to
manufacture brands and the future prospects of licensing on the way of regulations;
 And other difficulties this data have been processed in the quantitative part of this
research utilizing "descriptive statistic".
The data sources required and their accessibility have been already mentioned in Sections
of Literature Review and Data Collection Methods, where has been presented additional
information.
Additionally, extensive use of Internet and e-mail has been required and also the creation
of a database using Microsoft Office tools likes Excel, Word, Project and Power Point. All
the research has been conducted in London, UK. But some communications by e-mail or
telephone, which have been required as well, with some organizations, have been done
abroad, actually in Kaliningrad, Russia to obtain collected and updated information.
46

4.2 Presentation of the result
This section introduces a short analysis of the result of the research. In this dissertation I
have attempted to summaries the major developments how is licensing for manufacture
of branded products currently being handled and how is licensing develop in the
future.
In previous analysis I have expected to sort out how is licensing present in Western
Europe, Eastern Europe, and Asia and have concentrated on to licensing strategy and
environmental factors, including political and economical conditions, governmental
policy, law regulation, distribution methods, cultural aspects and short review has been
done about licensing market in Hong Kong.
Specific focus to analyse the licensing for manufacture and brand management has been
based on manufacturing of non-exclusive products, executive licensing for manufacture
company with focused on technology, also basis phenomena idea "finish manufacture"
like higher-end products realised in Hong Kong.
The Operation function of international licensing agent and case study on Special
Economic Zone, named "Kaliningrad", concentrated on car’s manufacture "AVTOTOR"
which has been presented like as an example of Russian licensing market, have been also
analysed.
Important point for analysis of the Russian market is emerging new market in this region,
which has, became the one of the largest markets in the world.
All analysed factors of licensing have been presented in current literature and have
examined both from the textbook and from academic articles. To finalise the finding it can
be present in some words, as the most important factor for a successful international
licensing business is that it needs to be based on a meaningful identity, high performance
and skilled management.
47

V - CONCLUTION
5.1 Limitation of the methodology
A potential shortcoming in the study may be related to the measure of licensing across the
globe. Majority companies contacted would be in Europe, UK, Russia and Asia, so the
conclusions from the research cannot be generalized. Lack of proper probing is also a
limitation as questionnaire responses may lead to facts, which the researcher might ideally
like to discuss with the respondent, but the primary data collection methodology would not
allow such luxury.
5.2 Summary of the results
On my point of view, section summary of the result is not only one of the main sections of
the dissertation. Summary of the result has got start from previous professional experience
and huge theoretical knowledge, based and management skills, which have realised during
the generation idea to practical productive operation management in licensing business
and a strong foundation for jumping to higher level of any market in global world.
Therefore I have focused on my dissertation where I expected and summarized some
practical results in my very deep research in the major developments how is licensing for
manufacture of branded products currently being handled and how is licensing
develop in the future.
 I have expected how is licensing strategy developing in the Global level and in the
Western and Eastern Europe and Asia and have analysed licensing strategy and
environmental factors as control points for interring in to non-developing market.
 Political and economical conditions, governmental policy, law regulation,
distribution methods, cultural aspects, size market analysis have been given and
explained for many reason to make correct entry in to licensing market.
48

 Specific focus to analyse the licensing for manufacture has been based on the
licensing for manufacture of non-exclusive products while given opportunities
operated in licensing businesses without limited from big size of distribution
licensing companies.
 Executive licensing for Manufacture Company focused on technology and
foundation an idea, such as higher-end products has realised and used more
advanced technology while so practical and productive in Hong Kong.
 I have observed the examples of licensing industrial experiences and customer
demands on contrasting the successful market in Hong Kong, where is best
economical and environmental platform for licensing business.
 I have identified a working definition for licensing for manufacture, brand
management and image of branded products.
 Also I have considered the Operation function of international licensing agent,
case study from new and limit experienced Special Economic Zone, named
"Kaliningrad", with developing business structure, where has been presenting a
positive licensing business example of the car’s manufacture "AVTOTOR", with
potential opportunities for developing licensing in the future on the huge Russian
market which would hold true for the literature discussion and the finding.
 I have viewed important point for analysing of the Russian market is emerging new
market in this region, which has, became the one of the largest markets in the
world.
49

5.3 Recommendation
The main goal of my research has targeted to obtain answer for question, how is licensing
for manufacture of branded products currently being handled. The evidence from the
research shows that licensing business has to focus on licensing technology of
manufacture and non –exclusive brand product, but it need to be recognise in the market
and operate on to developing licensing market across global licensing distribution system
which does not regaled licensing business for manufacture of small companies and use
advanced technology for manufacturing high-end product. And by the way it is possible to
make patent for new brand names and manufacturing of high demand goods for Russia, as
example. In making this assessment, license holders should consider all of criterions and
provide a useful licensing strategy for their companies, evaluate new parameters that affect
it, study of the issues involved in the development of the new licensing strategy. Good
management for developing licensing in the future need to be done. The dissertation has
concentrated on the data accumulated from my research. There, therefore, lies scope for
future research.
50

BIBLIOGRAPHY
HONG KONG Business. The portable encyclopaedia for doing business with Hong
Kong – Edward G.Hinkelman
Business in Asia Pacific – Sonia EL Kahal
Licensing Best Practices: Strategic, Territorial, and Technology Issues - Robert
Goldscheider
The Licensing Business Handbook Sixth Edition - Karen Raugust and the Editors of
The Licensing Letter;
International Business, J.J.Wild, K.L.WILD, J.C.Y.Han.
(2.) Commission Regulations (EC) No. 772/2004 on the Application of Article 81(3) of
the Treaty to Categories of Technology Transfer Agreements.
(3.) Council Regulation (EC) No. 1/2003 on the implementation of the rules of
competition laid down in Articles 81 and 82 of the Treaty, as of 16 December 2
Asia's patent challenge. (2007) Managing Intellectual Property, Issue 16
Zimmer and Westrum (2007) Should you license or Manufacture your invention
Licensing & acquisitions update. Maparel Magazine, 15432009, Mar2007, Vol. 48, Issue 8
Hart, C (1998) Doing a Literature Review, Releasing the Social Science Research
Imagination London, Sage Publications
Hong, S (2007) Diverse Companies CMaitalize on Tour de France Branding., Bicycle
Retailer & Industry News, Vol. 16, Issue 6
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Macrae, C. (2001), World-Class Brands, Addison-Wesley, Wokingham, pp.22-72
51

Melamdowitz, H (2005) licensing others to use your brand, Finance Week, June 29
Nasser, A, (2007), Expanding the formal economy., McKinsey Quarterly, 2007 Special
Edition, p97-98
Plumpton, V (2005), When to register a trademark, Finance Week, June 29
Peterson, J (2007), The Employment Relationship and the Social Costs of Labour., Journal
of Economic Issues, Vol. 41 Issue 2, p375-382
Saunders, Lewis, Thorn hill (2003) Research Methods For Business Students
PitMan Publishing London
Sloan, C (2006), Waverly inks Major license with Ellery, Home Textiles Today, Vol. 27
Issue 16, p1-6
Tan, J (2007), If You Can't Beat Forbes Asia, Vol. 3 Issue 3, p46-47
Competition Policy Review Committee Report on the Review of Hong Kong’s
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Financial Services and the Treasury Bureau, Broadening the Tax Base: Ensuring our
Future Prosperity What’s the Best Option for Hong Kong, Consultation Document, July
2006
Census and Statistics Department Gross Domestic Product (2005, First Quarter 2006,
Second Quarter 2006)
Competition Policy Advisory Group Report 2004-2005
Hong Kong 2005 (yearbook published by the Information Services Department of the
Hong Kong SAR Government
52

Print Journals, Newspapers and Magazines
Soan, Carole (2007), Waverly to be sold. Furniture/Today, Vol. 31 Issue 28, p1-112
Tan, J (2007), If You Can't Beat Forbes Asia, Vol. 3 Issue 3, p46-47
IMF Country Report, People’s Republic of China-Hong Kong Special Administrative
Region
Invest Hong Kong Quarterly News Letter, various issues
Mainland and Hong Kong Closer Economic Partnership Arrangement (Government
Logistics Department, Government of the Hong Kong SAR, 2004)
Supplement to the Mainland and Hong Kong Closer Economic Partnership Arrangement
(Government Logistics Department, Government of the Hong Kong SAR, 2005
World Trade Organization Trade Policy Review Hong Kong, China, 2002
. Websites
www.globalbrandsgroup.com
"LIMA"—International Licensing Industry Merchandisers Association
www.licensing.org/intro/history.cfm
http://www.nolo.com/article.cfm, Date accessed 10/06/2007
Licensing Definition (2007) Wikipedia http://en.wikipedia.org/wiki/TradeMark Date
accessed 10/06/2007
53

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