Answering an international business question
The question isLicensing propriety technology to foreign competitors is the best way to give up a firms competitive advantage. Discuss.and comment on three of the students discusions on the word document
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Licensing propriety technology to foreign competitors is the best way to give up a firms
competitive advantage. Discuss.
Comment on these:
1-After reading this statement I believe that it is true. I believe that licensing proprietary
technology to foreign competitors is the best way to give up a firms competitive advantage.
I believe this because when this happens you run the risk of losing the technology. When
foreign competitors are allowed to use your technology you lose the advantage you have
over them. This then leads to the company losing market power. If they take your
technology and then advance it, even more, you could run the risk of snow falling behind.
Your company has invested in this technology to get you to where you are today and
companies are now benefiting from your time research and money. Even though I think the
statement is correct I try and always understand both sides of an argument. I believe that
you could definitely come up with times that it is okay to license to foreign competitors. For
example, if the licensing agreement can be set up to reduce the risks of the companys
technical knowledge being completely given up then licensing could be an okay option.
2- I agree with this statement. When you license proprietary technology it increases the risk of
losing the technology. It can also make the firm give up comparative advantage because you
lose the advantage over them. Your firm will be falling behind of other firms because they will
benefit from your advancements. Having these advancements will benefit you and making you
a stronger competitor. However, there can be some advantages with licensing propriety
technology to foreign competitors as long as its done strategically. By licensing you can have
the dominant technology in the market. Overall, I agree with this statement that licensing
propriety technology to foreign competitors is the best way to give up a firms
competitive advantage.
3- I agree with this statement to an extent. A licensing agreement is an arrangement
whereby a licensor grants the rights to intangible property to another entity for a specified
time period, and in return, receives a royalty fee. Intellectual property includes patents,
inventions, formulas, processes, designs, copyrights and trademarks. As one of the entry
modes into a foreign market, firms are attracted to licensing because it does not have to
bear the development costs and risks associated with opening a foreign market, avoids
barriers to investments, and allows a firm with intangible property that might have
business applications, but which doesn’t want to develop those applications itself, to
capitalize on market opportunities. In addition, by licensing its technology to foreign
competitors, the firm may discourage them from developing and producing their own,
possibly better, technology and establish its own technology as the dominant design in the
industry and business.
However, licensing has several disadvantages as well. The firm won’t be able to have tight
control over manufacturing, marketing and strategy necessary to realize experience curve
and location economies. The firm will also be compromising its ability to coordinate
strategic moves across countries by using profits earned in one country to support
competitive attacks in another.
Comparing the advantages and disadvantages of licensing, it is true that it may be the best
way to give up a firm’s competitive advantage since the attractions of licensing are
probably outweighed by the risks of losing control over technology. However, if done
strategically the firm may not have to give up its competitive advantage.
Licensing propriety technology to foreign competitors is the best way to give up a firms
competitive advantage. Discuss.
Comment on these:
1-After reading this statement I believe that it is true. I believe that licensing proprietary
technology to foreign competitors is the best way to give up a firms competitive advantage.
I believe this because when this happens you run the risk of losing the technology. When
foreign competitors are allowed to use your technology you lose the advantage you have
over them. This then leads to the company losing market power. If they take your
technology and then advance it, even more, you could run the risk of snow falling behind.
Your company has invested in this technology to get you to where you are today and
companies are now benefiting from your time research and money. Even though I think the
statement is correct I try and always understand both sides of an argument. I believe that
you could definitely come up with times that it is okay to license to foreign competitors. For
example, if the licensing agreement can be set up to reduce the risks of the companys
technical knowledge being completely given up then licensing could be an okay option.
2- I agree with this statement. When you license proprietary technology it increases the risk of
losing the technology. It can also make the firm give up comparative advantage because you
lose the advantage over them. Your firm will be falling behind of other firms because they will
benefit from your advancements. Having these advancements will benefit you and making you
a stronger competitor. However, there can be some advantages with licensing propriety
technology to foreign competitors as long as its done strategically. By licensing you can have
the dominant technology in the market. Overall, I agree with this statement that licensing
propriety technology to foreign competitors is the best way to give up a firms
competitive advantage.
3- I agree with this statement to an extent. A licensing agreement is an arrangement
whereby a licensor grants the rights to intangible property to another entity for a specified
time period, and in return, receives a royalty fee. Intellectual property includes patents,
inventions, formulas, processes, designs, copyrights and trademarks. As one of the entry
modes into a foreign market, firms are attracted to licensing because it does not have to
bear the development costs and risks associated with opening a foreign market, avoids
barriers to investments, and allows a firm with intangible property that might have
business applications, but which doesn’t want to develop those applications itself, to
capitalize on market opportunities. In addition, by licensing its technology to foreign
competitors, the firm may discourage them from developing and producing their own,
possibly better, technology and establish its own technology as the dominant design in the
industry and business.
However, licensing has several disadvantages as well. The firm won’t be able to have tight
control over manufacturing, marketing and strategy necessary to realize experience curve
and location economies. The firm will also be compromising its ability to coordinate
strategic moves across countries by using profits earned in one country to support
competitive attacks in another.
Comparing the advantages and disadvantages of licensing, it is true that it may be the best
way to give up a firm’s competitive advantage since the attractions of licensing are
probably outweighed by the risks of losing control over technology. However, if done
strategically the firm may not have to give up its competitive advantage.
…
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