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(A) The president of your company (XYZ Manufacturing, Inc., Buffalo, New York) comes to you with a license offer for a company in Osaka, Japan. In return for sharing the company's patents and know-how, the Japanese company will pay a license fee of 5 percent of ex-factory price of all products sold based on the U.S. Company's license. The president wants your advice. What would you advise the president to do regarding the above offer? Explain in details.
(B) When 3M Company enters international markets, it typically begins by exporting products from the United States and selling them through company-owned overseas subsidiaries. As volume increases, 3M ships semi-finished goods, such as huge rolls of tape, and uses local workers to cut and package the material. The next step is to move into local manufacturing on its own. Why does 3M use this approach instead of licensing or joint ventures? Explain in details.
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