Write the discussion (300-400 words)
After reading Case 5 on international licensing, what are your thoughts? Share at least two main ideas/topics you took out of the case 5 that you believe to be important when accessing global trade and its challenges. Please, justify your response, and feel free to cite outside sources, using APA style. 300-400 words.
Reply to the 2 discussions (around 200 words each)
After reading the article, I think the existence of licensing is very necessary. And more and more forms derived from licensing are becoming more and more important. A company with licensing is a much easier and faster way to run a company than a sole proprietorship or a company that offers differentiation or service. The head office can provide a lot of help and regulation to the licensee. There are many companies that we are familiar with that are franchised, such as KFC and McDonald’s. They operate with agreed products, decoration styles, staff dress code, and even similar store sizes. And compared to franchising, the company is more able to achieve centralized control while maintaining a smaller scale, which can earn reasonable profits and does not involve engaging in capital risk.
In the case of 7-11, the world’s largest convenience store franchise organization, the company controls the vast majority of its operations through a franchise system. For example, similar store sizes, training for licensees and employees, research work for branch stores, and reasonable profit sharing. 7-11 is able to provide branches with a detailed system including training, finance, advertising and marketing, thus greatly ensuring 7-11’s reputation and image. Able to build and have good customer relationship. The image competition within each branch is also a good way to promote healthy competition within the company.
It is probably because the franchise model is so attractive that the lack of suitable franchisees has long been a major constraint for franchisors seeking to grow. Even before the recent reduction, a national survey found that more than 70% of franchisors cited a lack of suitable franchisees as their main ongoing challenge. And now there are also more new forms of company operations, such as franchising. More and more forms are also reducing the cost for companies to open branches. Diversified business methods are also bringing more substantial profits to the company.
authors, A., Balsarini, P., & Additional informationFundingNo funding was provided for this research. (n.d.). Why franchisors recruit franchisees from the ranks of their employees. Taylor & Francis. Retrieved November 19, 2021, from https://www.tandfonline.com/doi/full/10.1080/0965254X.2020.1733053.
Harvard Business Publishing Education. (n.d.). Retrieved November 19, 2021, from https://hbsp.harvard.edu/product/W17017-PDF-ENG.
Global trade entails licensing agreements that give industries access to new technology when seeking market products or services. The transfer of propriety access is a process of sustain the quality of service or product that is used in different locations globally. Industries get licensing agreements to exploit international markets while meeting the standard of quality of foreign markets. However, international licensing must expect barriers to market entry based on policy of foreign location (Halpern Levy Yang & Practising Law Institute, 2021). Different countries have licensing requirements for industries seeking to use proprietary technology for commercial purposes. Branding and trading of merchandises requires retailers to secure licensing agreements based on its destination country. International licensors exist in different countries to help industries that are technology-intensive function in the market (In Hilpold, 2021). Similarly, retailers that seek merchandise sale must get approval from international licensors to operate in foreign markets. The United States has 41 international licensors while Europe has six. Licensing agreements are unique to a nation’s market conditions that can disrupt commercial activities for industries. In food or sports industries, negotiations about licensing agreements is more common because unlike technology, the transfer of proprietary feature is lengthy. Foreign markets must cross-reference standards of other nations to ensure the standard of quality remains similar to the original brand.
Global trade faces the challenge of foreign markets that control the policy on technology dependent industries. International licensors regulate use of technology in foreign markets based on their economic interests. This process means controlling acceptance or denial of imports when an industry looks to enter its market. Commercial enterprises seeking to profit from global trade also struggle with rapid technological change. This condition affects the licensing agreements that can exposure the industry to risk of lawsuit or economic growth. Foreign markets that dictate the quality standard for an industry recognize the pressure of compliance issued to commercial enterprises. Global trade struggles in foreign markets because the quality of standard applied to an industry cannot match the rate of technological development (Ivey, 2017). International licensors give broad agreements for use in technological assets that risks market opportunity for foreign companies. Also, most international licenses rely on agreements made between companies from different nations. The problem is the domestic market can experience entry of a local competitor that limits market profitability.
Halpern, M., Levy, I. J., Yang, J., & Practising Law Institute, (2021). Advanced licensing agreements, 2021. New York, New York: Practising Law Institute.
In Hilpold, P. (2021). European International Law Traditions. Cham: Springer International Publishing: Imprint: Springer.
Ivey, R. (2017). NOTE ON INTERNATIONAL LICENSING. School of Business Foundation: Boston University.