Question

Explain in your own words the possible alternatives to licensing for Cameron?

Using Cameron auto part case study

Answer 1

Alternatives

Australian Joint Venture

Alex Cameron has the alternate option of entering into a joint venture with McTaggart. The agreement would consist of shipping components to Australia where they will be finished and assembled into flexible couplings. The Australian location leads to Cameron and McTaggart avoiding a 13 percent import tariff on finished goods. Instead, the joint venture will pay a 5% tariff on the components. The joint venture will be a fast mode of entry into the stable Australian market.

As McTaggart has a division located in Australia, they would provide the joint venture with local market knowledge and experience.

French Joint Venture
Michelard & Cie., a family owned distributor organization has proposed a venture providing Cameron with the chance to penetrate France’s market. The components would be shipped to France where they would be finished and assembled into couplings. Cameron would receive a profit for the components like one quarter of sales at a marginal profit of 40%. When the venture is in a position to soak up the entire production technology, the plant would then independently produce the flexible couplings.

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