Contractual Entry Strategies

  1. 15.1 Explain contractual entry strategies.

Two common types of contractual entry strategies are licensing and franchising. Licensing is an arrangement by which the owner of intellectual property grants another firm the right to use that property for a specific time period in exchange for royalties or other compensation. As described in the opening case, a royalty is a fee paid periodically to compensate a licensor for the temporary use of its intellectual property. The royalty is usually a percentage of the gross sales generated from use of the licensed asset. As an entry strategy, licensing requires neither substantial capital investment nor extensive involvement of the licensor in the foreign market. Licensing ...

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