Transactional Strategies
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Licensing offers entry to foreign markets without the company entering the market assuming the same level of risk as with a joint venture or strategic alliance. In a licensing arrangement, the company granting the license (the licensor) gives certain rights and access to a company in the target market. This licensing agreement typically covers patents, company name, processes and similar intangible assets. In return, the licensee pays royalties on each item sold (typically, although some other license arrangements can be implemented) back to the licensor. The licensor has control over the selection of licensees, and can use that control to exert influence since if the licensee does not meet expectations, a new licensee can be found. Licensing agreements are mutually beneficial to both parties since the licensor gains the royalty revenue and the licensee gains access to technology or products which would otherwise be unavailable.A joint venture is an equity partnership between companies from two different countries. The two companies pool resources and know-how in order to create a third company which meets specific needs of both companies. In some cases, two companies with complementary strengths will form a joint venture in order to take advantage of lower labor costs in a third nation, or to gain access to a new market. This is the situation with Hitchiner where the American company sought to gain access to Latin America and lowe
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between these two organizations will result in benefits accruing to both.
A joint venture might have made sense for Laura Ashley and FedEx in the sense that a third company could have been formed in order to handle the distribution of inventory and control of transportation. However, this did not fit the business plan of FedEx, which was to expand its role as the transportation/logistics supplier of choice not just for Laura Ashley, but for other manufacturers, as well. These companies sought and achieved a strategic alliance arrangement which was awkward in its initial stages, but which is expected to provide both companies with ample rewards.
This arrangement may be successful because both companies are committed to the long-term benefits which will accrue from the alliance, and because both companies recognize the importance to the other of making the partnership work. Such alliances are based on trust as well as mutual benefit, but careful groundwork was laid in order to ensure that both FedEx and Laura Ashley understand what the other expects to gain from the arrangement, and what each is expected to contribute. Where licensing may have a short-term lifespan, and where joint ventures become entities in their own rights
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Some common words found in the essay are:
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Approximate Word count = 1991
Approximate Pages = 8 (250 words per page)
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