When Converse Sourced Production Of Its Shoes To India, It Entered Into A Licensing Arrangement. What Are The Benefits And Negatives Of That Action? Do You Think It Has Helped Or Hurt The Company? The Brand?


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Aisha answered
Licensing is a form of trade agreement whereby a company grants a license or permission to another company for a performing a certain function. I believe the outsourcing of the production activity through license will help the company establish its global reach and also the company will minimize its production costs by producing in a low waged country. There are many benefits for a company that is involved in a licensing agreement such as:
- It is easier to expand through licensing.
- Production in India will cost less.
- More global brand recognition.
- Improvement of Cash flow

Following might be adverse effects of licensing:
- The quality of the production might suffer.
- Company might loose control to a certain extent.

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