Medium-sized australian audio equipment

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Reference no: EM132176134

A medium-sized Australian audio equipment manufacturing company has developed a technology that can be used to produce a new type of wireless headphones combining high-resolution audio capability with distinctive design to allow people enjoy pure and authentic sound with no distracting background noise and no annoying cables. Due to the high production costs in Australia, the company wants to exploit this technology more efficiently in countries where production costs are lower, for example, China. But due to the lack of capital and experience in managing foreign direct investment (FDI) overseas, the company has ruled out the strategies of FDI (e.g. WOS and JV). Assuming the company has found one of the best headphone manufacturers in China as a potential business partner, there are three options left on the table: [1] The Australian company can approach the Chinese company to negotiate a pure market-based contract, which would require the Australian company to provide the Chinese company with the new technology and the Chinese company need to produce wireless headphones made out of this technology. The two companies will share the profits (or losses) based on the terms and conditions stipulated in such a contract, [2] The Australian company can negotiate a licensing agreement with the Chinese firm to earn royalty fee, and [3] The Australian company can try to enter into an OEM (original equipment manufacturing) agreement with the Chinese firm, allowing the Chinese firm to produce headphones in China for the Australian company and then the Australian company will re-sell the products around the world under its own brand. Which of the above three strategies is most likely to be successfully negotiated and implemented? And why?

Reference no: EM132176134

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