The United States is the European Union’s (E.U.’s) greatest economic ally, so they do not have a discrete unrestricted trade transaction. The Transatlantic Trade and Investment Partnership (TTIP) discussions commenced in 2013 and were halted three years later, lacking a result. After being reckoned superseded, they were officially disbanded in 2019. Regardless of this, due to World Trade Organization (WTO) limitations, transatlantic trade continues to have one of the least overall levies in the globe (about 3%) (Demertzis and Fredriksson). Exporting the new blood machine from the States to nations in the E.U. would be advantageous as manufacturing costs are slashed by half, and since the market in the E.U. is readily available, all the company would need to pay for are the tariffs for exportation.
Licensing a European firm to work conjointly with the U.S. business would mean that both parties must sign a memorandum of understanding (MOU). The agreement is to help easily facilitate the development of the revolutionary blood machine, which in the long run means profits are shared between them as structured. Every company means to maximize their profits, and by licensing foreign firms, the profits are split but saving on the tariffs on the bright side if exportation from the U.S. was to take place.
Setting up a wholly-owned subsidiary in Europe calls for setting up shop. It would be the best course of action in that the company gets to expand the business. Tapping on both the home market and E.U. market. Setting up a shop calls for heavy investing, including purchasing land or buildings where the manufacturing will occur (Papanastassiou et al.). Since every business is oriented towards a long-term goal, this alternative is the most suitable. The company gets to own the rights of manufacturing and selling the product all in one without sharing their secrets. And with a subsidiary creates more potential in tapping more clients as the business expands.
References
Demertzis, Maria, and Gustav Fredriksson. “The E.U. Response to U.S. Trade Tariffs.” Intereconomics, vol. 53, no. 5, 2018, pp. 260–268.
Papanastassiou, Marina, et al. “Changing Perspectives on the Internationalization of R&D and Innovation by Multinational Enterprises: A Review of the Literature.” Journal of International Business Studies, vol. 51, no. 4, 2019, pp. 623–664.