Download - The Strategy of Using Foreign Investors and Licensees

The Strategy of Using Foreign Investors and Licensees: A Philippine Perspective

Chapter 6

To a certain extent, the firms in the developing countries should think in terms of exploiting countries

POTENTIAL BENEFITS THAT CAN BE DERIVED FROM COOPERATION WITH A FOREIGN FIRM

Company Goals: POTENTIAL BENEFITSAccess to the patent rights or manufacturing rights Trademark Technical service agreement Management contract Access to foreign marketing channels Additional capital investment Protection from nationalization Invest in a foreign joint venture

Access to the patent rights or manufacturing rightsThe Philippine company may want access to the patent rights or manufacturing rights for certain types of product.


TrademarkThe local company may know that certain brand of a foreign product is selling very well in the local market.


Technical service agreementThe Philippine company may wish to start manufacturing a new product where technical assistance is required. In this case, a technical services agreement will usually accompany a license to manufacture.


This service agreement includes;a. Help in the design and construction of the b.

c. d.

e.

plant Provide training for the companys skilled workers, technicians, engineers, and managers. Help in product redesign Help in technical advertising Provide full-time or part-time production engineers to help maintain quality and productivity.

Management contractAnother situation is when the Philippine company feels that it needs to improve its management system. Sometimes the most efficient way of obtaining modern management knowhow is to have a management contract with a foreign manufacturing company.POTENTIAL BENEFITS THAT CAN BE DERIVED FROM COOPERATION WITH A FOREIGN FIRM

Access to foreign marketing channelsAccess to foreign marketing channels can be one of the most important factors in a firms profit potential, as well as in the Philippines overall economic development.


Additional capital investmentWhen a Philippine firm is planning to expand or diversify, additional capital is required. A joint-venture arrangement of such nature may provide easier access to local financial institutions.


Protection from nationalizationWhen the political climate for private investment deteriorates as when the government shifts to a more socialistic stance - a joint venture with a foreign firm will often provide protection from nationalization.


Invest in a foreign joint ventureFinally, it should be noted that Philippine firms can benefit from joint venture and licensing agreements with firms in Asian and African countries which are less industrialized.


POTENTIAL PROBLEMS THAT CAN BE DERIVED FROM COOPERATION WITH A FOREIGN FIRM

POTENTIAL PROBLEMS1. Loss in the degree of control by the

Philippine owners1. Disagreements

POTENTIAL PROBLEMS THAT CAN BE DERIVED FROM COOPERATION WITH A FOREIGN FIRM

Other References:http://www.oppapers.com/essays/TheStrategy-Of-Foreign-InvestorsAnd/792761http://studypoints.blogspot.com

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Point of View of the GovernmentBalance of payment Economic development effects Political effects

The use of strategy

Types of StrategyStrategy for type of partner Ownership strategies Control strategies Manufacturing strategies Marketing strategies

Strategy for type of partnerProduct stage Size Extent of international operation nationality

Ownership strategies

Control strategies

Manufacturing strategies

Marketing strategies