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.Licensing is a contractual arrangement whereby the firm, the licensor,
offers proprietary assets to a foreign company, the licensee, in
exchange for royalty fees.Company can use the licensing agreements to enter world market in the following ways:-
a)It can provide the product that may not be existing in the particular country.
b)The company that obtains the license is responsible for the quality,distribution and storage of product whereas the company that grant the license uses the part of the sales of the product which is provided by the another country as a part of royalty or fee.
Thus the company which has the royalty of the product might cost more if products are exported but the cost is reduced through the licensing agreement with the other company of the other country.
Two fundamental strategies:-
a)Which products you sell where and should you able to customise them to local markets.
b)Should products be standardized ?
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