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Licensing Proprietary Information to Foreign Competitors

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Licensing proprietary technology to foreign competitors is the best way to give up a firm's competitive advantage. Discuss whether you agree or disagree with this statement.

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I would disagree with that statement for various reasons. Proprietary information can be divided in many ways to ensure that the company holding the license does not lose its competitive edge if part of the information goes to a foreign competitor.

When an organization creates a license, it ensures the license has what it is willing to share and what portion of its technology it will withhold. The invention, for example, can be written such that it may not be dissected through reverse engineering. Organizations such as Microstrain for example create patents so that foreign competitors are limited with what they can do and hence become dependent on the organization.
An organization can also license limited portion (selective licensing) or basics of their technology. The enhancements or ...

Solution Summary

In today's global market, sharing information has become a strategy that each organization uses to ensure they keep an upper hand in getting business and increasing revenues. Licenses are also written in such a way that the organization is still able to compete in the market, but also understands its competition.

See Also This Related BrainMass Solution

Information Technology & Business Multiple Choice

1. Some global enterprises engage in joint research projects to broaden their contacts. What is another reason?
A) to reduce risk
B) to ease barriers to entry
C) to increase costs
D) to decrease certainty
E) to increase competitive complexity

2. Political factors in choosing a foreign manufacturing site include:
A) attitude toward foreign investment
B) cost of local borrowing
C) degree of labor force in management
D) currency rate
E) interest rates

3. Which one of the following is a key dimension of customer demand in foreign markets?
A) customers' acceptance of sub-standard products.
B) the rate of product innovation desired.
C) the company's desire to propagate its brand name.
D) the number of suppliers in that foreign market.

4. Factors that increase the degree to which an industry is multi-domestic include:
A) a need for standardized products
B) fragmented industry with few competitors
C) distribution channels unique to each country
D) the existence of economies of scale
E) high technological dependence of subsidiaries' R&D

5. Rapid technological development:
A) requires less management control
B) has no effect on product life cycles
C) lengthens product life cycles
D) shortens product life cycles
E) requires no management control

6. Franchising is a special form of:
A) exporting
B) joint venture
C) foreign branch
D) licensing

7. A global firm competing in a global industry must:
A) be responsive to global conditions only
B) be responsive to both global and local conditions
C) be responsive to local conditions only
D) compete in a multi-domestic industry also
E) not use intracorporate resources when also competing in a multi-domestic industry

8. A multi-national corporation:
A) has limited location options for functional activities
B) should not have different locations for marketing and operations
C) should spread R&D functions across facilities
D) must determine how to coordinate activities
E) must have highly coordinated functions among its different locations

9. Coordination of functional activities across countries:
A) is very necessary in a multi-domestic industry
B) is not necessary in a global strategy
C) will stifle global strategic growth
D) is more necessary in global firms
E) none of the above

10. The choice of a pure global strategy results in:
A) high coordination and geographic concentration of activities
B) low coordination of activities
C) geographic dispersion of functional activities
D) loose coordination of geographic activities
E) none of the above

11. Research has shown that in different countries corporate financial goals:
A) are basically consistent
B) vary
C) often change to match the U.S. perspective
D) are usually to maximize stock price
E) are always to maximize earnings before taxes

12. Prior to global expansion remember to:
A) maintain consistent stock maximization policies
B) guard against changing the mission statement
C) guard against changes in strategic decision making
D) review and revise the mission statement
E) none of the above

13. The mission statement:
A) does not accommodate changes in strategy
B) should not be revised because of globalization
C) is unlikely to remain in tact in a global context
D) does not specify a basic market need it is to satisfy
E) specifies the firm's intention of securing its future through growth and profitability

14. The global corporation's mission statement:
A) has a growth dimension closely tied to profitability
B) reflects the firm's commitment to survival through growth and profits only
C) develops a directional flow of benefits from environments to the firm
D) expresses separateness of revenues and social responsibility
E) none of the above

15. Globalization:
A) necessitates strategic decision makers located exclusively at corporate headquarters
B) disperses corporate resources
C) contains operations centrally
D) makes strategic decision makers most accessible for decision making
E) reduces the need for a mission statement

16. The complexity of a strategy refers to:
A) the breadth of a firm's business lines
B) a continuum of possible strategic choices
C) the diversity of the products
D) the number of critical success factors required
E) none of the above

17. The primary niche market approach for exporting:
A) begins with a mutually agreeable pooling of capital
B) involves the transfer of some industrial property right
C) is to modify select product performance or measurement characteristics to special foreign demands
D) utilizes a foreign branch extension to distribute
E) none of the above

18. The transfer of an industrial property right is called:
A) franchising
B) licensing
C) exporting
D) transferring
E) none of the above

19. Globalization strategies include:
A) joint contracts
B) patents
C) corporation expansion
D) niche-market exporting
E) none of the above

20. Joint ventures:
A) can not address complex markets
B) speed efforts to integrate into the foreign environment with less financial commitment than acquiring a foreign subsidiary
C) must be overseen by an outside board of directors
D) requires no disclosure of proprietary information
E) none of the above

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