Question

1. List types of collaborative arrangements
2. List general motives for collaborative arrangements
3. List advantages and disadvantages of licensing

Answer 1

Types of collaborative arrangements -

1.Licensing = a firm grant rights to another company to use a specificed area for a specificed period and in return licensee pay a royalty to the licensor.

2.Franchising= In this franchisor gives authority to franchisee to sell their products , goods or services to use their trade mark and brand name.

3.Joint venture= when two or more parties agreed to use their resources for accomplishing the particular task .But the ventures is its own Identity , Ventures are separate from the other participants.

4.Turnkey Operation = Is a collaborative arrangements in this one firm contract with another. one firm gives all ready bussiness model, permits , equipments and inventory and the other contract firm is only need to ''turn the key ''open the door and start running their business.

5.Equity Alliances = in this at least one collaborative firm takes an ownership position .the main objective of this to make the bussiness solid and make it hard to crush .

6.Management contract = in this collaborative contract one firm provides all kind of management functions to another firm for a fee.when a firm completely justify this particular firm manage their management work efficiently only then a firm make a management contract with that particular firm.

General motive of collaborative arrangements are -

1.Spread and Reduce cost = when two or more parties working together so they share the cost of operations of bussiness and they wouldn't feel any burden of cost.

2.Avoid competition = when 2 or more parties working as a whole in a coordinative way so they are not a competitors of each other anymore.

3.Gain Market knowledge = if there are more parties so of course there are abundance of market knowledge and experiences.

4 .Specialise In competencies . When two or more parties working together so each one can work as accordance their capabilities and excellence.

Advantages of licensing

1.Quick and easy entry

2.Lower capital requirements

3.Large return of investment

4.You will not need to incur cost of production, selling , packaging, promoting

5.Lisencing creating new bussiness opportunities.

Disadvantages of Licensing

1.You will lose your control over product , packaging, promotion and selling.

2.Licinsing create a dependency over other licensee.

3.Licensing may damage the reputation of both the parties if one party done a something wrong.

4.It create more opportunities of misuse or theft because you are exposing yourself at higher level in front of other parties.

5.Poor strategies or quality of licensee destroy the product image in market.