International Business

Topics: License, Patent, Royalties Pages: 15 (3811 words) Published: April 25, 2014

Executive Summary

This report addresses and analyses the benefits of Sun-Believable as a potential new product in the Californian sustainable energy market. The current economic environment in the United States (U.S.), particularly in the State of California, provides an excellent opportunity for the consumption of Sun-Believable. This is due to the high levels of disposable income and State Government incentives to switch to sustainable energy products.

Licensing to a Californian energy company is the recommended entry strategy for Sun-Believable. Licensing will transfer the responsibility for manufacturing and marketing Sun-Believable and this eliminates set up costs and associated risks of product failure. The licensing agreement will allow access to a greater market share through the existing customer base of a Californian energy company. There is a possible risk of quality control of the product and the risk of sales not being accounted for in the financial records. This can be overcome by the employment of an external auditor.

California is in a strategic geographical location due its access to international transportation networks and their inclusion in the North American Free Trade Agreement (NAFTA). The current legal environment provides legislative provisions for the protection of intellectual property and new inventions.

The possible risks associated with foreign currency exchanges are the fluctuations between the AUD and USD. In the post-Global Financial Crisis (GFC) economy, these fluctuations can be significant. The U.S. corporate taxation laws present a risk to the royalties paid from the license agreement, as the U.S. corporate tax rate is one of the highest in the world at 39%. There is potential competition for sustainable energy products in the Californian market. In order for Sun-Believable to be successful in its market entry, it must adhere to production standards set out by the Californian State Government.

The cultural differences that exist between Australia and the U.S. are slight, however Australians must be aware of particular American business practices when negotiating the license agreement.

This report provides a comprehensive industry analysis of the Californian sustainable energy market and how market share will be gained through a licensing agreement.
Table of Contents

ENTRY STRATEGY1
OPPORTUNITY AND RISK ASSESSMENT2
OPPORTUNITIES2
Economy2
Geographic Location2
Legal Structure2
Incentives from Government3
RISKS3
Foreign exchange3
Tax4
Competition4
Solar Standards4
Cultural barriers5
MODE OF ENTRY6
LICENSING AGREEMENT6
ADVANTAGES OF LICENSING7
RISKS OF LICENSING7
LICENSING AGENT8
POSSIBLE LICENSEES8
PATENTING8
BIBLIOGRAPHY9
APPENDICES11
APPENDIX A: ECONOMIC STATUS11
APPENDIX B: SOLAR LEGISLATION12
APPENDIX C: GOVERNMENT BUDGETS13
APPENDIX D: FORWARD CONTRACTS14
APPENDIX E: DURABILITY REQUIREMENTS16
APPENDIX F: STANDARDS OUTLINE18
APPENDIX G: FEE SCHEDULE21
APPENDIX H: CULTURAL DIFFERENCES23
APPENDIX I: SAMPLE LICENSE AGREEMENT24
APPENDIX J: NON-NEGOTIABLE CLAUSES30

Entry strategy

Sun-Believable is a unique and innovative product. The most appropriate entry strategy for Sun-Believable will be through a transnational strategy. This involves the cooperation with another company abroad to configure a value chain that can exploit location economies as well as coordinate operations while responding to local market demands.

The method that is best suited for the mass production of Sun-Believable is through a licensing agreement. An agreement will see the production rights licensed to an appropriate energy company. Revenue from the production of Sun-Believable will be received through royalties, which are a percentage of the gross sales. This remuneration will be based upon the number of units produced and will result in economies of scale, as each additional unit produced will reduce...

Bibliography: City Data. (2010). Californian Climate. Retrieved 19 March 2012 from http://www.city-data.com/states/California-Climate.html
CNN Money
Current Results. (2012). Californian Weather. Retrieved 12 March 2012 from http://www.currentresults.com/Weather/California/annual-days-of-sunshine.php
Daniels, J., Radebaugh, L., & Sullivan, D
Development, G. O. (2012). Foreign Investment. Retrieved 3 March 2012 from http://www.business.ca.gov/RelocateorExpand/ForeignInvestment.aspx
Ehow Money
E-Notes. (2011). Licensing and Licensing Agreements. Retrieved 1 March 2012 from http://www.enotes.com/licensing-licensing-agreements-reference/licensing-licensing-agreements
Forex.com
Free Republic. (2012). Retrieved 30 March 2012 from http://www.freerepublic.com/focus/f-news/2866536/posts
Go Solar California
Governor’s Office of Economic Development. (2010 November ). California Investment Guide. Retrieved 2 March 2012 from http://business.ca.gov/Portals/0/Additional Resources/Reports/Updated%20California%20Investment%20Guide%20November.pdf
Mahalo Royalties
Russell Investments. (2012). Forward Contract. Retrieved 10 March 2012 from http://www.russell.com/us/glossary/derivatives/forward_contract.htm
Solar Rating and Certification Corporation
Westpac Bank. (2009). Enhanced Forward Contract Product Disclosure Statement. Retrieved 20 March 2012 from http://www.westpac.com.au/docs/pdf/pb/enhanced-forward-contract.pdf
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Sustaining International Business Operations Essay
  • Essay on A Review of Literature on How to Manage International Joint Venture Successfully
  • Challenges of International Business Management Research Paper
  • International Business Ventures Essay
  • International Business: The Role of Culture Essay
  • International Business Essay
  • International HRM Major Assignement Essay
  • International Business Essay

Become a StudyMode Member

Sign Up - It's Free