Posted: February 27th, 2021
Respond to Jesse
Whenever a company approaches another company to a licensing deal there are always pros and cons to that. The following are two major potential risks of a licensing deal: the CEO would lose a portion of profits because the firm will have to share those profits with the Malaysian firm and also that Malaysian firm might produce another product that will be similar to the after that agreement have expires. The first major risk is that the company will lose a lot of profit because it will have to share the profits with the Malaysian firm. Once a company decides to do a license deal then they will have to share the profit with the other company (Hillstrom). The second major risk is that the Malaysian firm might be producing a competitive product that the original agreement has expired (Hillstrom). It is very important that the CEO does all the research that is possible, so that the CEO knows exactly what the firm is doing at all times. The two major benefits of a licensing deal are the following: that the company will still be getting profit and that that the company will not have to provide all the work. The first major benefit is that company is getting profit (Hillstrom). Even if the company is getting twenty percent of the profit then, I would say twenty percent of something is better than getting nothing. The other major benefit is that the company will not have to do all the leg work (Hillstrom). Once the company gets the software and its dynamics going then once the deal is in place, the Malaysian firm will start doing all the work. The two suggestions that I would give to the CEO to accept the offer are the following: getting something is better than getting nothing and that the company will be able to focus on more ideas to expand from the laser disks. Again, Even if the company is getting twenty percent of the profit then, I would say twenty percent of something is better than getting nothing. The last reason is that the company could start focusing on new ideas. Once a company starts the licensing deal then they can come up with a new concept that will feature off of that brand and be able to have more profits.
Out of the countries that were provided, the one I selected was Brazil. The following are two major political risks of operating a business within Brazil: that Brazil government belief and demand that both government agencies and private citizens use only open source software and insurance as well. The first one is that Brazil’s government belief, and demand, that both government agencies and private citizens use only open source software (Cullen & Parboteeah, 2017). This is a major political risk because it leaves the United States vulnerable for possible attacks and viruses but that goes for both countries as well. The second major risk is the insurance is too high (Cullen & Parboteeah, 2017). When traveling abroad then the insurance will skyrocket it. Two mitigate these risks is to try and work a deal for both sides so that the software is better adequate and that the insurance can be split between the two countries.
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