You are in browse mode. You must login to use MEMORY

level: W07 Entering foreign markets (Part I)

Questions and Answers List

level questions: W07 Entering foreign markets (Part I)

Question	Answer
Goals and decision regarding market share, profitability or competitive positioning. Degree of control in the operations. Resources and capabilities. Overall conditions in the foreign country. Network branch in the market and potential partners. Is it long term profitable	What are the factors that base the entry mode decision?
Producing products or services in one country and selling / distributing them to customers in other countries. Advantages: Easy and simple approach with no required operations in the foreign country. Disadvantages: Cost (tariffs and transport), Unexperienced relation with the new market, Local demand can be unprioritized	What defines "Exporting" and what is its pros and cons as an entry mode?
Arranged based expansion where a given stakeholder is granted the right to use a business concept or an intelectual property. Advantages: Low risk and low cost. Potential for fast expansion Disadvantages: Profit loss, low control of operations. If something goes wrong it can damage the brand.	What defines "Licensing & Franchising" and what are their pros and cons as entry modes?
Aquire a property in the foreign country through investments. Can be accomplished in the following way: -Wholly owned subsidary -Aquisition -Equity-based collaborative ventures with foreign partners.	What defines "FDI" and what is its pros and cons as an entry mode?
Acquiring all the stocks of the subsidary. Advantages: High level of control with a great profit potential, local knowledge of the market due to local personnel. Disadvantages: Risky business that requires a lot of capital, Challenging establishment where channels, partners etc needs to be built. Regulatory restrictions from the government.	What defines "Wholly-owned subsidary (greenfield investments)" and what is its pros and cons as an entry mode?
Mergers: When two separate firms combine their assets in order to create a new legal entity. Aquisition: When a company aquires all the assets from a targeted company and the target ceases to exist. Advantages: Economies of learning and scale. High profit potential. Reduced entry barries and increased overall market power. Disadvantages: Intergration issues	What defines "Mergers & Acquisitions (M&A)" and what is its pros and cons as an entry mode?
Disney & Pixar: Aquisition by Disney Google & Android: Aquisition by Google Dow Chemical & DuPont: Merger Michael Kors & Jimmy Choo: Aquisitoin by Michael Kors Astra & Zeneca: Merger	Name five examples of M&A
Contract regulated cooperations without equity holdings or creation of new entities. Ex. Licensing agreements, joint R&D, supply/distributoin agreements.	"Non equity strategic alliance"
Contract specified equity invetment by one of the partners into the other	"Equity strategic alliances"
Cooperating firms invest in a new firm and share its profits.	"Joint Venture"
Advantages: Shared risk, learning opportunities, access to new markets, partner complementary skills. Disadvantages: Conflicted interests by one or both partners, cultural clashes	What are the advantages and disadvantages with these strategic alliances?
Complememtarity: Do partners offer complemtary resources? Congruent goal: Is the goal for the venture common and shared? Compatability: Are the firms different culture and organization compatible with eachother? Change: How can the other C's change over time?	The four C´s of strategic alliances can help determine if the alliance is worth pursuing. Define them.