2. LICENSING
What is?
Is based on a contractual relationship between the
licensor an the licensee.
Licensing can be a very effective way for the
internationalization of the activities of small and
medium enterprises.
3. Characteristics
A license may be granted by a party (licensor) to
another party (licensee) as an element of an agreement
between those parties
1. Term: many licenses are valid for a particular length
of time. This protects the licensor should the value of
the license increase, or market conditions change. It
also preserves enforceability by ensuring that no
license extends beyond the term of the agreement.
4. 2. Territory: a license may stipulate what territory the
rights pertain to.
3. A licensor may grant permission to a licensee to
distribute products under a trademark.
4. The assignment of a license often depends on
specific contractual terms.
5. A licensor may grant a permission to a licensee to
copy and distribute copyrighted works such as "art"
5. TYPES OF LICENSING
LICENSING AGREEMENTS: The arrengaments
between the licensor and the licensee are typically
laid out in a legal document known as a Licensing
Agreement.
Types of Licensing Agreement:
Concerning an existing technology/product.
The making of provisions for technology sharing
as it evolves during the lifetime of the agreement.
6. LICENSING OF PATENTS: Involves granting another
entity the right to use an original process or type of
equipment.
7. EXAMPLES
A greeting card company can obtain a license to use
image Hannah Montana or The Simpsons, characters
on greetin cards.
8. A licensing right classic characters like Winnie the
Pooh, which offer lasting value and provide consistent
business.
9. Board games from popular companies such as Hasbro
are often licensed from their creators.
10. Advantages
• Appealing to small companies that lack resources
due to low risk and capital commitment, while
maintaining improved delivery and service levels in
local markets.
• Fast market access and more importantly the ability
to circumvent barriers to foreign entry that have
been imposed through quotas, high tariffs, or
limited licensing to local firms.
11. • Adequate marketing information and control through
access to low-cost information about local market
performance and competitive reactions, as soon as the
licensed product enters the local market.
• Ability to take advantage of the possession of a
patented product that is subject to rapid technological
changes while it is otherwise unprofitable to
simultaneously exploit along multiple markets.
12. Disadvantages
• Potential creation of future competitors, through
disclosure of accumulated knowledge and experience
when the license contract ceases.
• Licensee may not be committed to this particular
product line, and thus possible marketing
underperformance may not be controlled.
• Passive interaction with local market, leading to
limited market learning.
13. • Limited flexibility to apply sophisticated technology
and marketing advances at a later stage.
• Limited profit potential in case the product is more
successful than initially thought.
• Policing the implementation of the licensing
agreement is either inefficient or very expensive.
