1. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 0 Chapter Six Licensing, Strategic Alliances, FDI

2. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 1 Forms of Licensing

3. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 2 6-4 Elements of a Licensing Contract Exhibit 6.1 Source: Adapted from Hall, 1983, pp. 67-68 Technology package Definition/description of t he licensed industrial property Know-how to be supplied and its method of transfer Supply of raw materials, equipment, and intermediate goods Use conditions Field of use of licensed technology Territorial rights for manufacture and sale Sublicensing rights Safeguarding trade secrets Responsibility for defense/infringement action on patents and trademarks Exclusion of competitive products Exclusion of competitive technology Maintenance of product standards Performance requirements Rights of licensee to new products and technology Reporting requirements Auditing/inspection rights oflicensor Reporting requirements of licensee

4. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 3 Elements of a Licensing Contract Exhibit 6.1 cont. Source: Adapted from Hall, 1983, pp. 67-68.

5. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 4 Forms of Strategic Alliances Nonequity Strategic Alliances: – Distribution Alliances – Manufacturing Alliances – Research and Development Alliances Equity Strategic Alliances – Joint Ventures

6. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 5 Forms of Foreign Direct Investment (FDI) Sales Subsidiaries Manufacturing Subsidiaries Foreign Corporate Offices

7. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 6 Four Stages of Business Negotiations Exhibit 6.2

8. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 7 Type A and Type B Negotiators Exhibit 6.3

9. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 8 CULTURAL SENSITIVITY IS A NECESSARY COMPONENT IN DOING BUSINESS. PEOPLE-SKILLS COUNT! KNOW WHOM YOU ARE DEALING WITH YOU MUST KNOW SOMETHING ABOUT YOUR OPPOSITE NUMBER’S ETHNIC BACKGROUND AND NATIONALITY. GENUINE BEHAVIOR IS ESSENTIAL FOR THE ESTABLISHMENT OF TRUST. Culture and Negotiations

10. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 9 KNOW WHAT YOU ARE SAYING WHAT YOU ARE COMMUNICATING AND WHAT THE OTHER PARTY IS RECEIVING IS NOT ALWAYS THE SAME THING. “PLAIN SPEAKING” WHICH IS POPULAR IN AMERICA IS SOMETIMES USED AS A COVER-UP IN OTHER CULTURES. NONVERBAL COMMUNICATION IS A KEY PART OF ANY NEGOTIATION PROCESS, WHETHER PEOPLE REALIZE IT OR NOT. Culture and Negotiations

11. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 10 KNOW WHEN TO SAY WHAT AMERICAN MANAGERS DO NOT LOOK TOWARD THE LONGER VIEW OF NEGOTIATIONS. THEY WANT TO TAKE A PROBLEM-SOLVING, “LAY IT ALL ON THE TABLE” APPROACH TO NEGOTIATIONS. MOST OTHER CULTURES ARE THE OPPOSITE AND PREFER TO CONSIDER THE RAMIFICATIONS OF A GENERAL RELATIONSHIP BEYOND THE SPECIFIC CONTRACT AGREEMENT. THE LONGER VIEW IS MUCH APPRECIATED. Culture and Negotiations

12. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 11 Nonadaptation? CULTURE IS CHANGING SUPERFICIALITY/LACK OF TRUST KEEPING ONE’S CENTER INTRINSIC MERITS OF OFFER

13. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 12 Product Entry and Marketing Control Can Be Different Exhibit 6.4 Marketing control

14. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 13 An Optimal Entry Mode Matrix Exhibit 6.5 Product/Market Situation

15. Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Irwin/McGraw-Hill ©The McGraw-Hill Companies,, Inc., 2000 Slide 6 - 14 Exhibit 6.6 Entries under Different Conditions Product/Market Situation