Case Study Analysis:

Will Our Partner

Steal Our IP?
Group 10 Jingjing Ruan 104308107
Yewande Bamgbala 104332025
Submitted on: Yu Pei 104225532
11/11/2015 Zhaoqi Yang 104254927
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Problem identification
Should The Company Sell the Intellectual
Property For Its Vehicle Control Unit?
Although, could increase its revenue for that year by
selling its IP, it loses its competitive advantage to a bigger
firm. The loss of this advantage poses a threat to its
continued existence in the market.

Should Prime ElektroTek decide not to sell its IP, it

maintains its competitive advantage and the right to
produce its control unit but makes no profit from the
proposed business transaction and loses a potential client.

The dilemma comes to play as selling its IP would be

profitable for a short term but the loss of that IP could ruin
its chances of growing; leaving the company stuck
between making a huge sale and prolonging its existence.
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 Issue analysis
• Limited Consumer Market
The company is limited by the size of its consumer
market. Due to its small consumer market and its
desire to grow and be more profitable, Prime
ElektroTek is battling with how best to utilize its
intellectual property.

Although Prime ElektroTek had clients, it was not as

profitable as it hoped to be, hence, it yearned for
bigger and more powerful clients like Blue Sky which is
a stated-owned enterprise and one of the most dynamic
automakers in China.

Assuming Prime ElektroTek had a number of big clients,

its bargaining power will be higher. The possibility of a
reoccurrence of releasing its IP will be lower with a
larger consumer market

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 Issue analysis
• Risky Intellectual Property Environment
in China
Lost control of IP in China enables producers to adeptly
decipher and fabricate others’ core technology and use
this knowledge for their own production without respect
for Intellectual Property. However, related regulations in
China has little protection for Intellectual Property as
litigation fee is much more than recovery of damages.
The high risk of venturing into the Chinese market poses
a threat to Prime ElektroTek.

Once this IP is sold to Blue sky, nothing stops Blue Sky

from dismantling it and understanding the technology;
thereby making Blue Sky a bigger competitor.

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Comparison of options Protect the Intellectual
Sell the Intellectual Property
Property
Advantage : Advantage:
• In the short term, Prime • In the long term, Prime
can gain capital inflow can maintain the core
which can be used for competitive advantage
researching and developing from the special
new technologies, new intellectual property
products and new • Maintains it reputation
techniques amongst its present clients
• Gains experience and
knowledge for dealing with Disadvantage:
future clients from the • Loss of a major client
Chinese market • Prime would face the
increasing pressure of
Disadvantage: competition because Blue
• Loss of competitive Sky will find another supplier.
advantage • Reductions of market share
• Prime would destroy the in china
future earning power on • Seek other big companies to
account of the lose of the do business with
core technology
• studyIncreased
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 recommendation
• Prime ElektroTek needs to acquire the exclusive rights to
its vehicle control unit.

• Reject the proposal from Blue sky, as it stands to lose its

competitive advantage by complying and lose some
current small firm clients as well

• Propose a license agreement in which Blue Sky pays an

annual royalty to Prime ElektroTek annually for the use
of its control unit. Include a confidentiality agreement
that prevents Blue Sky from disclosing this information
with other firms. This ensures that Prime ElektroTek can
make license agreements to other firms and receive
royalty payments

• Increase its marketing and advertising strategy to find

more second-tier companies that are willing to become
clients

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