Question

Why is it said that licensing is an easier way to expand globally?

Answer 1

Answer:

It is said that licensing is an easier way to expand globally because of the following reasons :  

(1) Licensing is a less expensive mode of entering into international business because the licensors do not have to make any investment abroad.

(2) The degree of risk to the licensor is very low. Licensor is paid in advance the fixed fee as a percentage of production .

(3) Licensing is also benefited by the personal contracts and local knowledge of the licensee.

(4) Risk of business takeovers or government interventions are lower because the business is managed by the local person (licensee).

(5) In licensing  business only the licences are legally entitled to conduct the business. No other party allowed to make use of the patent and trademarks.

Licensing is a Legal contractual relationship in which one form grants access to its patents or technology to another firm in a foreign country for a fee called royalty. The firm granting the permission is known as licensor and the firm to whom permission is granted is known as licensee.

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Answer 2

Answer: It is said that licensing is an easier way to expand globally because of its advantages over other modes of international business. Less Expensive: Under the licensing, it is the licensee who sets up the business unit.