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Methods of Technology Transfer
There are many reasons that a company might want to expand its operations on an international level: growth, profitability, and local market saturation are just a few examples (Beamish, Morrison, Inkpen, & Rosenzweig, 2003). Because different types of companies have different priorities when they expand into global markets, it is important to choose an appropriate method of internationalization. The purpose of this paper is to discuss the benefits and challenges associated with four basic methods of internationalization and to compare and contrast the methods. Finally, this paper will evaluate how changes and advances in technology have served to drive the internationalization of business.
Methods of Internationalization
The four basic methods of internationalization ? licensing, exporting, joint ventures, and wholly owned subsidiaries ? each have their own benefits and challenges. Below, all four methods are described and compared. Some methods are clearly more appropriate for large, well-established organizations, while others could be used by small or large businesses alike. Understanding the similarities and differences among these four methods is important when a company is trying to identify its approach to expanding internationally.
Licensing occurs when one organization authorizes another organization to independently sell/resell their technology and collects a licensing fee, typically called a royalty payment. Licensing is a method used by companies looking to expand their product lines into new markets, not for globalizing internal business processes. The benefits of licensing are the low level of investment required and the high margin generated th ...