International-Business-Dr-R-Chandran-E-book
International-Business-Dr-R-Chandran-E-book International-Business-Dr-R-Chandran-E-book
2. INTERNATIONAL LICENSING 18 International Business- Dr. R. Chandran International licensing is an agreement between the licensor and the licensee over a period of time for the use of brand name, marketing, know-how, copyright, work method and trade mark by paying a license fee. For example, British American Tobacco Company (BATS) has given licenses in many countries for the manufacture of their brand of cigarettes “555”. In India, ITC is the licensed producer of “555”. Pepsi cola licensed to Heineken of the Netherlands giving them the exclusive right to produce and sell Pepsi cola in Netherlands. The licensor has minimum involvement in day-to-day functions. Therefore the returns are also comparatively low. Licensing specifies the territory as well as period. The licensor gives such permission after establishing such a command-able position globally. It has a brand command. License Fee Licensing Concept and Practice Licensor Licensee Manufacture and Market One or more countries as per agreement Country A Country B Only for Private Circulation
LICENSOR LICENSEE PROVIDE THE RIGHT TO USE INTELLECTUAL PROPERTY AND BRAND NAME 3. FRANCHISING Licensing Process USE THE INTELLECTUAL PROPERTY TO PRODUCE PRODUCTS FOR SALE IN HIS COUNTRY AND BRAND 19 International Business- Dr. R. Chandran RECEIVES ROYALTY MONEY PAYS ROYALTY TO THE LICENSOR FOR USING INTELLECTUAL PROPERTY AND BRAND NAME Franchising is a form of licensing wherein the franchiser exercises more control over franchisee. The franchiser supplies the main part of the product, and provides the following services to the franchisee: 1. TRADEMARKS 2. OPERATING SYSTEMS 3. PRODUCT, & 4. BRAND NAME Company support systems like advertising, training of employees, quality assurance are also involved in franchising. McDonald, Dairy Queen, Domino’s Pizza and KFC are the known franchise brands. NIIT & Aptech have appointed franchisees in Africa, south East Asia, Gulf countries and China. Hotels like The Hilton and Marriott are well known operators in hotel sector. Jatia’s in India are the national franchisees of McDonalds. All the investments on premises, HR, operations and promotions are totally borne by the franchisees. In practice the franchiser is determined to maintain a standard throughout the world in terms of quality brand logo and symbol. But the product is adaptable depending on the socio-cultural background of the country. McDonalds sells BEEF BURGERS in Russia & VEG BURGERS in India. Only for Private Circulation
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- Page 51 and 52: 1. POLITICAL RISKS 2. ECONOMIC RISK
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2. INTERNATIONAL LICENSING<br />
18<br />
<strong>International</strong> <strong>Business</strong>- <strong>Dr</strong>. R. <strong>Chandran</strong><br />
<strong>International</strong> licensing is an agreement between the licensor and the<br />
licensee over a period of time for the use of brand name, marketing,<br />
know-how, copyright, work method and trade mark by paying a<br />
license fee. For example, British American Tobacco Company<br />
(BATS) has given licenses in many countries for the manufacture of<br />
their brand of cigarettes “555”. In India, ITC is the licensed producer<br />
of “555”.<br />
Pepsi cola licensed to Heineken of the Netherlands giving them the<br />
exclusive right to produce and sell Pepsi cola in Netherlands. The<br />
licensor has minimum involvement in day-to-day functions. Therefore<br />
the returns are also comparatively low. Licensing specifies the<br />
territory as well as period. The licensor gives such permission after<br />
establishing such a command-able position globally. It has a brand<br />
command.<br />
License Fee<br />
Licensing Concept and Practice<br />
Licensor<br />
Licensee<br />
Manufacture and Market<br />
One or more countries as per agreement<br />
Country A<br />
Country B<br />
Only for Private Circulation
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