Discussion: Expanding Internationally - Assignment Example

This is owed to the fact that the systems to be licensed have to be fully developed prior to the licensing agreement. Thus, a firm may be able to take advantage of foreign production without indulging in certain obligations such as managerial or ownership obligations. Poor Compensation is one of the factors that may result in rejection of an offer from a potential licensee. Compensation represents a basic issue of the licensing process. Thus, unwillingness by the licensee to meet the desired compensation in the licensing process would result in termination or rejection of the agreement by the licensor.

This is owed to the fact that poor compensation from the licensee would reduce the viability of the process with regard to profitability. This implies that a licensing deal must be able to exceed its opportunity cost so as to be accepted by the licensor. Violation of rights, privileges and other agreement constraints represents another factor for rejection. Rights and privileges also represent a significant aspect of a licensing agreement. Therefore, violation of the set constraints by the licensee would result in the termination or rejection of the contract by the licensor.

For instance, the licensee may employ the distribution of low quality products in an attempt to boost profit margins. However, such a process would be detrimental to the image of the licensor. Thus, such a process would result in rejection of the licensing agreement by the licensor. Products The U.S. being the world’s richest country also represents the world’s largest importer. Therefore, examples of products imported by the country include automotive accessories and crude oil. This implies that the companies concerned with providing the U.S. with such products employ certain strategies of international business entry in order to access the U.S. market.

For instance, companies involved in the crude oil industry employ certain FDI programs in accessing the U.S. market. On the other hand, companies involved in the production and distribution of automotive accessories employ the method of exporting in accessing the U.S. market. Therefore, both automotive accessories and crude oil employ different modes of entry into the U.S. market. However the respective modes of entry in to the U.S. market are based on certain research based on prevailing conditions.

These conditions may include different government policies, logistical considerations and distribution issues. As a result, most of the companies opt for direct exportation of their products into the U.S. market. Moreover, export intermediaries may also be used to facilitate the process. Critical Analysis: Licensing Advantages and Disadvantages of International Licensing Advantages of international licensing as a mode of entry into foreign markets are mainly owed to its flexibility and suitability.

For instance, international licensing employs a low financial risk since no huge amount of capital is required prior to engagement in the process. In addition, the process also employs a low cost assessment market potential. This is owed to the fact that the process mainly deals with intellectual property. Moreover, international licensing is also boosted by existence of suitable tariffs between the trading partners. On the other hand, international licensing as a means of foreign market entry also harbors some disadvantages.

For instance, the employment