International Business: The New Realities, 5th Edition

Advantages and Disadvantages of Licensing

1. 15.3 Describe the advantages and disadvantages of licensing.

Exhibit 15.3 summarizes the advantages and disadvantages of licensing from the perspective of the licensor. Let’s highlight some key points.

Exhibit 15.3

Advantages and Disadvantages of Licensing to the Licensor

Advantages	Disadvantages
Does not require capital investment or presence of the licensor in the foreign market	Revenues are usually more modest than with other entry strategies
Ability to generate royalty income from existing intellectual property	Difficult to maintain control over how the licensed asset is used
Appropriate for entering markets that pose substantial country risk	Risk of losing control of important intellectual ...