Question

You are the international manager of a US business that has just invented a revolutionary new personal computer that can perform the same functions as existing PCs but costs only half as much to manufacture.  Several patents protect the unique design of this computer. Your CEO has asked you to formulate a recommendation for how to expand into Western Europe.  Your options are (a) to export from the US, (b) to license a European firm to manufacture and market the computer in Europe, and (c) to set up a wholly owned subsidiary in Europe. Based on the information from chapter 8, evaluate the pros and cons of each alternative and suggest a course of action to your CEO.

Criteria	Maximum Points
1.- Student answered and elaborated on the pros and cons for each option (a,b,c)	9
2.- Student provided his/her recommendation	4
3.- Format	2
Total	15

Format:

• Maximum 2 pages, single space,

Times New Roman 12 pt font size

Answer 1

From the information given in the table above, it can be inferred that licensing offers the most protected mode of entry for products that are patented. Hence, it would be best for the firm to license a European firm to manufacture and market the computer in Europe.