Feasibility Report of Licensing Agreement between Alarmz Ltd Essay

Feasibility Report of Licensing Agreement between Alarmz Ltd. (Britain) and Rio Inc. (Brazil) - Essay Example Alarmz Ltd plans to enter into a licensing agreement with a Brazilian company Rio Inc. for the purpose of manufacturing and distributing a new tamper – proof vehicle alarm. This report aims to explore the possible issues related to this licensing agreement. Issues Related to Licensing Agreement with a Brazilian Company A licensing agreement involves a number of issues that a British company needs to consider before finalizing the deal with a Brazilian Company. Prominent issues are: 1) Government Permissions A licensing agreement with a foreign company for manufacturing and distribution of a product requires initial permissions from the relevant government (Stamicarbon 2011). These permissions will authorize the licensing agreement and allow Alarmz Ltd. to transfer its technology to Rio Inc. for a definite consideration. 2) Cultural Differences Both of the participants in this licensing agreement have different cultures. These culture poses great challenges to the effective exe cution of the licensing agreement in its true spirit. 3) Legal Support and Protection Legal protection acts as a corner stone for a business. In the instance where legal protection is weak or unavailable, the business survival can be at high stakes. Therefore it is important to ensure that the protections available to Alarmz Ltd in Britain are also available in Brazil. Intellectual property protection is of greatest importance. Therefore, it is important to understand the protection that is provided to the intellectual property, the types that are protected and time taken to register the rights. 4) Employment and Labor Laws Differences The economy of a country keeps on fluctuating. The employment laws are also affected considerably (StartupOverseas 2011). Therefore, there is a risk of strike by labor unions against any government measure or legal changes. As a result of which Alarmz Ltd will have to suffer in terms of the license royalties which will be considerably varied. 5) Custo ms and Tariffs, Excise Duties and other Taxes The customs, tariffs, excise duties and other taxes define the scope of government intervention in a particular industry. In case Brazilian government has imposed higher taxes to discourage certain practices, it might affect the license agreement execution significantly. 6) Competition and Economic Barriers The existing competition in the established market can pose great challenges to Rio Inc. to undertake the license agreement successfully and make a profit. The old market players have a marked share of the market based on their hard earned goodwill and reputation. The customers recognize, accept and value the products of the established brand names in the country. They doubt any new entrants with a zero-track record of activities in their own country. When Rio Inc. will start the business of manufacturing and distribution of vehicle alarm in Brazil under the trademark of Alarmz Ltd, it may have to face problems in