Discussion Board
Licensing is a business agreement where a company (licensor) grants another company (licensee) permission to use their intellectual rights such as the right use their business secret, trademarks, copyrights, brand name, patented technology or produce and sell their goods. The Licensee agrees to pay a royalty according to an agreement with the licensor. The licensor must also abide by a series of conditions from the licensor. Licensing agreement can help a company venture to world markets. The licensor is able to go international without having to deal with international trade barriers, shipping and distribution costs. Depending on the nature of the agreement, the licensing company could also provide the licensee with the raw material to produce the product at a cost. The licensor will also benefit from the marketing that the licensee will do in their home market.
Product adaptation and product extension are the key product strategies that any company wishing to venture in to foreign markets must choose from. Product adaptation is a strategy that involves customization of the domestic product to suit the cultural, legal and economic aspects of the foreign market. On the other hand, product extension involves marketing the same product abroad as it is in the domestic market. In product extension, the company must be certain that the fundamental target market characteristics of the domestic market are similar to those of the foreign market they are seeking to venture to guarantee customer acceptance.
External legal environment plays a critical role in determining the success of a business in any part of the world today. It involves such laws and regulations as the consumer protection laws, contract laws, government procurement laws, security laws, employees’ protection laws, safety and health laws at the workplace, immigration laws, and employees’ termination laws (Farooq, par 4). These laws can vary widely between countries. They can either impact positively or negatively on a business’ success and growth. The laws and regulations determine the managerial decisions of every company running in any part of the globe.
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