Sewtex Business Law

Q: Should SewTex consider licensing its technology to one of the textile machinery manufacturers in Europe? Compare the advantages and disadvantages of this method entry to those of exporting.
Ans:Part A.
I think, to enter in European market, the better idea would be exporting rather than licensing. When companies have a business agreement a technology transfer via licensing the main mottoof company is to share the “know-how” with a company in another market so that it can manufacture your product with your trademark. With this whole deal in place the local manufacturing company gainsprofit by selling the product while the parent company makes earnings with royalties. Ususally after the duration of agreement has passed the main company acquires back its technology from the localcompany. The main concern of company holding the technology is the safeguard its technology. It can do it in the local country by registering a patent.
This whole idea sounds perfect to do businessbut Europe is a complicated place. It is not a single country but a union of many countries who have their Sovereignty intact. So to safeguard the technology in every country, company needs to filepatent application in every country. This process can be very cumbersome in nature and company might not end up with desired result. The European Union have been taking necessary steps and haveformulated a pan European patent process but so far no concrete procedure has been developed and thus there are still loopholes in the process which may lead to infringement of patent. Thus to safeguard thetechnology, the company holding the technology in this case must do business by exporting its products.
Part B.
Following table describes the advantage and disadvantages of Exporting andLicensing.
| Advantages | Disadvantages |
Licensing | 1. Local company takes care of production and sales while holding company earns with royalties. 2. With Licensing, manufacturing is done...