Contractual Entry Modes A company can use a variety of contracts such as : licensing, franchising, management contracts, and turnkey projects to market highly specialized assets and skills in markets beyond its nation’s border.

Licensing A company (licensor) grants rights to intangible property to another company (licensee). Cross licensing: ~occurs when company use licensing agreements to exchange intangible property with one another.

Exclusive license: ~grants company exclusive rights to produce and market a property in specific region. Non exclusive license: ~grants a company the right to use a property but does not grant it sole access to a market.

5 categories of intangible property : 1.Patents, inventions, formulas, processes, designs, patterns. 2. Copyrights for literary, musical, or artistic compositions. 3. Trademarks, trade names, brand names. 4. Franchises, licenses, contracts. 5. Methods, programs, procedures, systems.

Advantage : Advantage : Disadvantage : Disadvantage : ++ Finance expansion ++ Reduce risk ++ Reduce counterfeits ++ Upgrade technologies -- Restrict licensor’s future -- Reduce global consistency -- Lend strategic property

Motives for licensing : Faster start up lower cost Access to additional property right

Example: ** Every installed copy of the server software requires the purchase of a Windows server license. ** Novell (United State) licensed its software to 3 Hong Kong universities that installed it as the campus-wide standard.

Franchising Company ( franchiser) supplies another (franchisee) with intangible property over an extended period. Differ from licensing in several ways : 1. gave greater control over the sale of its product in a target market. 2. often use in service industries. 3. required ongoing assistance from franchiser.

Advantages Disadvantages + Low cost and low risk. + Rapid expansion. + Local knowledge. - Cumbersome. - Lost flexibility.

Motives Standardization Central purchasing High identification through promotion Effective cost controls