Benecol in the Us – Step 1 of Global Expansion

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ESSAY 1 Benecol in the US – Step 1 of global expansion There are some key issues in the case, and entry mode is the main issue as well as the market research. The third issue is their future plans, strategy and interest differences, and the collaboration with McNeil has not turned out to be as good as they did hope it would be, and they therefore need some changes. They have used an exclusive licensing agreement, “which is an arrangement whereby a licensor grants the rights to intangible property to another entity (the licensee) for a specified period and, in return, the licensor receives a royalty fee from the licensee”.1 Licensing agreements have both advantages and disadvantages for The Raisio Group. The advantages is that Raisio does not have to bear the development costs and risk associated with the opening a foreign market. The disadvantages are the fact that The Ratio Group looses the tight control for realizing experience curve and location economies. A licensing agreement is good, but still it has some weaknesses. Raisio is completely dependent on McNeil’s commitment to Benecol and the success of the McNeil’s market strategy. McNeil was not interested in launching Benecol globally in a big scale, and the Raisio group’s vision was to become a leading international life science oriented chemical company. This means; they have different opinions on expanding and different visions/interests. Since Benecol already is in the Finnish market, Rabbe Klements believe that they have an advantage in Europe. With the existing contract, Raisio have no rights to enter Europe and try to pitch their products there. The market in the US is not the same as in Finland. In Finland they started before they had any competitors with the same percentage results on cholesterol. The price was seven times the average margarine product, but it was still selling big time. They

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