Licensing as a Component of Competitive Strategy: A Comparative Analysis and Case Study

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Title: Licensing as a Component of Competitive Strategy: A Comparative Analysis and Case Study
Author: Edwards, Erica Renee
Advisors: Dr. Pamela Banks-Lee, Committee Member
Dr. Nancy L. Cassill, Committee Member
Dr. Michelle R. Jones, Committee Chair
Abstract: The purpose of this study was to investigate how licensing is used as a strategic tool within the apparel industry, to understand the relationship between licensing as a strategic tool and lifestyle branding, and to understand how license reacquisition impacts the competitive strategy of firms. Using a Three Phase methodology this study explored licensing, license reacquisition, and how the two relate to competitive strategy. Phase I was the creation of a major licensing studies taxonomy, which was used to gain insight into the strategic uses of licensing within other industries. Phase II, which consisted of two components included case studies of three leading apparel firms that participate in licensing and interviews with individuals from these three firms and other apparel industry representatives. Phase II was essential in understanding licensing as a strategic tool and how licensing and reacquisition are used competitively within the apparel industry. Phase III was the creation and validation of a theoretical model which depicts the relationship between strategic licensing, lifestyle branding, and reacquisition within the apparel industry to gain a competitive advantage. This research provides a foundation for future research in an emerging area of study by establishing a framework and conceptual model relating to licensing within the apparel industry. This study examines four research objectives. Phase I was used to satisfy Research Objective One and gain an understanding of licensing and how it is used as a component of competitive strategy. Licensing creates a competitive advantage to build the overall power of the brand, and differentiate the brand owner from its competitors. Within the apparel industry licensing is used predominantly to extend the brand?s presence beyond its core, and fulfill a particular niche or white space in the market. Phase II helped satisfy Research Objective Two, which was to understand the relationship between licensing as a strategic tool, and lifestyle branding. The study found that licensing broadens the scope and appeal of the brand, and allows the brand to offer products beyond its core. Positioned strategically these products add to the lifestyle image and assortment of the brand owner, and aids in the progression of a lifestyle branding strategy. Phase II was also instrumental in satisfying Research Objective Three, which was to investigate why and how firms reacquire license agreements, and how such a decision impacts the firm?s competitive strategy. The rights granted in a license agreement can be reacquired for various reasons including protection of quality and brand image, and overcoming a compromised market position. Reacquisition can also be the result of a control strategy, as having 100% control makes the brand owner more competitive in terms of identity, direction, and positioning against competitors. It has made the apparel industry more competitive while challenging the industry to constantly improve. The fourth research objective was to develop a conceptual model that depicts the relationship between competitive strategies, licensing as a strategic tool, and license reacquisition. The third phase visually depicts this relationship and presents the Competitive Licensing Theory, which states that: Apparel firms use Licensing as a Differentiation Strategy to extend the brands presence beyond its core, and License Reacquisition to gain a competitive advantage.
Date: 2008-11-30
Degree: MS
Discipline: Textile Technology Management

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