Market Entry Strategies for Entrepreneurs in India: Licensing, Franchising, Alliances, Man, Slides of Marketing

Download Market Entry Strategies for Entrepreneurs in India: Licensing, Franchising, Alliances, Man and more Slides Marketing in PDF only on Docsity!

Exam

Questions ▪ (^) Prepare a flow chart that shows the various types of entrepreneurs. ▪ (^) Prepare a diagram that shows the factors affecting entrepreneurs growth in India. 2

Session Outcome ▪ (^) Sketch the market entry strategies for an entrepreneur ▪ (^) Class Room Activity ▫ (^) Identify the various market entry strategies for an entrepreneur. 4

Market Entry Strategies Licensing Franchising Strategic Alliance Contract Manufacturing Joint Venture Mergers and Acquisitions 5

Licensing ▪ (^) Definition: A license is a legal relationship where one party, called the “Licensor”, grants to the other party, called the “Licensee”, the right to use or benefit from a trademark, technology, or other legal rights. ▪ (^) Licensing lets you instantly tap the existing production, distribution and marketing systems that other companies may have spent decades building. ▪ (^) In return, you get a percentage of the revenue from products or services sold under your license. Licensing fees typically amount to a small percentage of the sales price 7

▪ (^) Examples of licenses, include: ▫ (^) A license where one company, as licensor, allows another company, as licensee, the limited right to use a trademark for a limited purpose. ■ (^) Example: An example would include Walt Disney granting McDonalds a license for McDonalds to co-brand its McDonalds Happy Meals with a Disney trademarked character; 8

▫ (^) A license where a drug company that owns the patent to a certain drug, as licensor, grants a license to another drug company, as licensee, allowing them to manufacture and sell a drug that utilizes the patented formula. 10

▪ (^) For example, about 90 percent of the $ million a year in sales at Calvin Klein Inc. comes from licensing the designer's name to makers of underwear, jeans and perfume. ▪ (^) The only merchandise the New York-based company makes itself, in fact, are its women's apparel lines. 11

▪ (^) In all of these examples, the license is granting a limited right related to a particular asset – whether a trademark, technology, or formula. ▪ (^) The agreement that creates the relationship between the licensee and licensor is called a “license agreement” and while the license agreement will restrict what the licensee can and cannot do with the licensed asset, the license agreement does not allow the licensor to exert control over the overall operations of the licensee’s business. 13

Franchising

▪ (^) In return, the franchisee pays a one-time fee or commission to franchisor and some share of revenue. Some advantages to franchisees are they do not have to spend money on training employees, they get to learn about business techniques. ▪ (^) Examples of Franchising in India ▫ (^) McDonald’s, Dominos, KFC, Pizza Hut, Subway, Dunkin’ Donuts, Taco Bell, Baskin Robbins, Burger King^16

▪ (^) Under the franchise laws, a franchise relationship is created when the following three elements exist: ▫ (^) Trademark License – The license of a trademark, i.e. , you grant your franchise the license and right to use your business name or trademark to duplicate your business and establish a new location or service territory ▫ (^) Degree of Control – You require your licensee to enter into an agreement that gives you, as franchisor, a degree of control over the operations of your franchisee, i.e. , you restrict what they can and cannot sell from their business; 17

Functioning of Franchising ▪ (^) Under a franchise, the two parties generally enter into a Franchise Agreement. This agreement allows the franchise to use the franchisor’s brand name and sell its products or services. In return, the franchisee pays a fee to the franchisor. ▪ (^) The franchisee may sell these products and services by operating as a branch of the parent company. It may even use franchising rights by selling these products under its own^19

▪ (^) The franchisor may grant franchising rights to one or several individuals or firms. Consequently, if just one person gets these rights, he becomes the exclusive seller of the franchisor’s products in a specific market or geographical limit. ▪ (^) In return, the franchisor supplies its products, services, technological know-how, brand name and trade secrets to the franchise. It even provides training and assistance in^20