Licensing is a common entry strategy to enter into foreign market with a limited degree of risk. It is usually for a longer term and involves greater responsibilities for the local producer (Lambin, 2007). Licensing is similar like franc...
... middle of paper ...
...uction, and increased market power. Nonetheless, the big problem is power of control had been divided due to joint venture mean two companies join together to develop new business idea and environment. In order to solve this problem, the joint venture agreement is the optimal solution which it permits the avoidance of control problems. In addition, the presence of local firm facilitates the integration of the international firm in a foreign environment. (Lambin, 2007)
In the nutshell, MNC can earn global profit maximization in foreign market through either licensing or joint venture. It need to depend on how MNC policy work, if the management of MNC wish not engage in huge capital investment, they may heading to licensing. Yet, host country policy and regulation and inflation issue need to be concern too where it will change organization structure in foreign market.
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