Learning Goal: I’m working on a management discussion question and need the explanation and answer to help me learn.
Module 6, Discussion 2: Proprietary Technology
W7D2: Proprietary Technology
Introduction
Discussions are designed to help you critically analyze an international business problem, at times using the theories and frameworks described in your textbook.
Instructions
Respond to the given statement:
Licensing propriety technology to foreign competitors is the best way to give up a firm’s competitive advantage. Discuss.
Directions
You are advised to post at least two responses to each discussion question, one of which should be a reply to someone else’s post. Each response should be no fewer than 150 words and no more than 300 words. If you post only one response, the maximum score you can earn is 21/35 (60for this discussion.
Write a comment for the each responses below: (keep each comment within a word limit of 300 words.)
Response 1: Licensing proprietary technology I believe would give up a firms competitive advantage for several reasons. Depending on the firm this proprietary technology could be what differentiates the firm from its competitors and by allowing another firm to have this technology you could be potentially shooting yourself in the foot. Essentially you could be creating your own competition. What is coming to mind is if Apple started letting other companies put its iOS software on other phones it would probably lead to a decrease in sales of Apples iPhones.
Another thing that comes to mind is if you license your technology, it is more likely to be stollen. It is well known that that China has terrible IP laws and that you can get knockoffs there easily. If a company were to license its technology in another country, or even China, it could expect that this technology would get stollen and implemented in other products. Which could lead to the firm losing its competitive edge.
Response 2: In general, licensing proprietary technology to foreign competitors will result in a firm giving up their competitive advantage. This is because the licensor loses the exclusivity of the technology when it provides access to other firms in the marketplace. Even if the firm is in a foreign market, because of globalism, that firm can easily use the technology to create a product or service to compete with the licensor. However, there are cases when licensing proprietary technology can be beneficial for a firm. For example, if the firm perceives the risk of its technology being imitated by competitors in the marketplace, it may find licensing its technology and receiving royalties very beneficial. By licensing its technology, it reduces the risk of other firms developing a superior technology and increases the chances of its technology gaining mass adoption in the marketplace. If the firm succeeds in gaining mass adoption of its technology through licensing, the revenues earned from royalties have the potential to generate huge profits, creating a profit center for the company.
