| Summary: | Contracting a licence is buying or selling contract of technology, design and marketing experiencerelating to a product or process, and involves the contracting of knowledge and know-how. The granting of aninternational licence takes place when a company provides, in return for a fee or royalties, technology needed byanother firm to run business operations on a foreign market. When in this form, the granting of the licencerequires at least one of the following items: a brand name; operating experience; manufacturing technology;access to patents and trade secrets/industrial. Company that grants the licence get access on a foreign marketwith very low investment and, in many cases, the benefits of investment and market knowledge of a competentlocal firms. The company that received the licence get access to foreign technology, with a very smallinvestment. There are several very obvious advantages of activity under the license on international markets.The granting of a licence can improve cash flow situation for the company that attaches. Because the license ontechnology allows companies to bring products to market faster, the company enjoys early advantage of apositive balance of cash flow. In addition, obtaining a license means lower development costs. The licensedactivity may mean fewer profits in the long run. Immediate benefits of easy access to new technology, lower costsand the development of an early cash flow are attractive advantages of contracting a licence.
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