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What is licensing?
International license has been the essence of doing business when one wants to expand their venture. It is basically legal contract that authorizes a business and allows it to use the confidential practices of some other venture. From revenue generation to brand identity, licensing a company’s production has an array of merits, and equally holds few demerits too, like potential competition and potential risk.
The transmission of industrial property rights like partners, trademarks, and/or propriety know-how from the licensor to the licensee in some other country is defined as international licensing, and this offers an entitlement to use the powers in return of some reimbursement for a certain time span. This is mainly done to legally protect patents and trademarks, and guard against any form of infringement.
Students deal with assignments on advantages and disadvantages of international licensing
There are both advantages and disadvantages of international licensing, and here are few of them discussed. We often work on these while offering licensing assignment help services.
Advantages:
- Evading the restrains and rules of imports and the costs required for transportation to invade the foreign markets is the biggest advantage of having an international business license.
- The physical products are not relocated, rather the manufacturer just shirts them through intangible property rights and technology.
- The most overwhelming merit of licensing is incurring low entry cost to new markets and low direct risk.
- Also, the transfer costs are almost minimal and don’t need any fixed investment by the manufacturer. Also, if you have license, you actually are less prone to political risk that, mostly is associated with foreign investments.
Disadvantages:
- The licensor has no or minimal control of the licensee’s marketing mix and program. This becomes a hassle in the long run at times.
- The licensor only gets to have some control over the licensed products, but the volume of production or the marketing strategy is completely decided by the licensee.
- The performance and how the licensed product does in the market eventually depends solely on the brain work of the licensee.
- In case of exports or investments, the absolute size of returns is much more compared to licensing.
- The licensee might fail to discover the market opportunity and hence this becomes a hassle for opportunity cost to grow. Thus, a demerit of licensing is its exclusivity, as licensor is not allowed to market the products in the licensee’s country through some other mode, like exports or investments.
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