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The mode of entry into foreign market is through legal path, whereby you do all the registration of the business.
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What factors could cause a business to reject an offer from a potential licensee to make and market the firm's products in a foreign market.?
not follow the procedure of their licensor
What is licensing as a foreign market entry?
Licensing is defined as "the method of foreign operation whereby a firm in one country agrees to permit a company in another country to use the manufacturing, processing, trademark, know-how or some other skill provided by the licensor". It is quite similar to the "franchise" operation. Coca Cola is an excellent example of licensing. In Zimbabwe, United Bottlers have the licence to make Coke. Licensing involves little expense and involvement. The only cost is signing the agreement and policing its implementation.
What is extender strategy?
The extender strategy is when a firm expands into foreign markets that are similar to their current market. They use strategies that are currently successful to expand the business.
What are the types of Market Entry Modes in International Trade?
Foreign Market Entry ModesThe decision of how to enter a foreign market can have a significant impact on the results. Expansion into foreign markets can be achieved via the following four mechanisms:ExportingLicensingJoint VentureDirect InvestmentExportingExporting is the marketing and direct sale of domestically-produced goods in another country. Exporting is a traditional and well-established method of reaching foreign markets. Since exporting does not require that the goods be produced in the target country, no investment in foreign production facilities is required. Most of the costs associated with exporting take the form of marketing expenses.Exporting commonly requires coordination among four players:ExporterImporterTransport providerGovernmentLicensingLicensing essentially permits a company in the target country to use the property of the licensor. Such property usually is intangible, such as trademarks, patents, and production techniques. The licensee pays a fee in exchange for the rights to use the intangible property and possibly for technical assistance.Because little investment on the part of the licensor is required, licensing has the potential to provide a very large ROI. However, because the licensee produces and markets the product, potential returns from manufacturing and marketing activities may be lost.Joint VentureThere are five common objectives in a joint venture: market entry, risk/reward sharing, technology sharing and joint product development, and conforming to government regulations. Other benefits include political connections and distribution channel access that may depend on relationships.Such alliances often are favorable when:the partners' strategic goals converge while their competitive goals diverge;the partners' size, market power, and resources are small compared to the industry leaders; andpartners' are able to learn from one another while limiting access to their own proprietary skills.The key issues to consider in a joint venture are ownership, control, length of agreement, pricing, technology transfer, local firm capabilities and resources, and government intentions.Potential problems include:conflict over asymmetric new investmentsmistrust over proprietary knowledgeperformance ambiguity - how to split the pielack of parent firm supportcultural clashesif, how, and when to terminate the relationshipJoint ventures have conflicting pressures to cooperate and compete:Strategic imperative: the partners want to maximize the advantage gained for the joint venture, but they also want to maximize their own competitive position.The joint venture attempts to develop shared resources, but each firm wants to develop and protect its own proprietary resources.The joint venture is controlled through negotiations and coordination processes, while each firm would like to have hierarchical control.Foreign Direct InvestmentForeign direct investment (FDI) is the direct ownership of facilities in the target country. It involves the transfer of resources including capital, technology, and personnel. Direct foreign investment may be made through the acquisition of an existing entity or the establishment of a new enterprise.Direct ownership provides a high degree of control in the operations and the ability to better know the consumers and competitive environment. However, it requires a high level of resources and a high degree of commitment.The Case of EuroDisneyDifferent modes of entry may be more appropriate under different circumstances, and the mode of entry is an important factor in the success of the project. Walt Disney Co. faced the challenge of building a theme park in Europe. Disney's mode of entry in Japan had been licensing. However, the firm chose direct investment in its European theme park, owning 49% with the remaining 51% held publicly.Besides the mode of entry, another important element in Disney's decision was exactly where in Europe to locate. There are many factors in the site selection decision, and a company carefully must define and evaluate the criteria for choosing a location. The problems with the EuroDisney project illustrate that even if a company has been successful in the past, as Disney had been with its California, Florida, and Tokyo theme parks, future success is not guaranteed, especially when moving into a different country and culture. The appropriate adjustments for national differences always should be made.Comparision of Market Entry OptionsThe following table provides a summary of the possible modes of foreign market entry:Comparison of Foreign Market Entry ModesModeConditions Favoring this ModeAdvantagesDisadvantagesExportingLimited sales potential in target country; little product adaptation requiredDistribution channels close to plantsHigh target country production costsLiberal import policiesHigh political riskMinimizes risk and investment.Speed of entryMaximizes scale; uses existing facilities.Trade barriers & tariffs add to costs.Transport costsLimits access to local informationCompany viewed as an outsiderLicensingImport and investment barriersLegal protection possible in target environment.Low sales potential in target country.Large cultural distanceLicensee lacks ability to become a competitor.Minimizes risk and investment.Speed of entryAble to circumvent trade barriersHigh ROILack of control over use of assets.Licensee may become competitor.Knowledge spilloversLicense period is limitedJoint VenturesImport barriersLarge cultural distanceAssets cannot be fairly pricedHigh sales potentialSome political riskGovernment restrictions on foreign ownershipLocal company can provide skills, resources, distribution network, brand name, etc.Overcomes ownership restrictions and cultural distanceCombines resources of 2 companies.Potential for learningViewed as insiderLess investment requiredDifficult to manageDilution of controlGreater risk than exporting a & licensingKnowledge spilloversPartner may become a competitor.Direct InvestmentImport barriersSmall cultural distanceAssets cannot be fairly pricedHigh sales potentialLow political riskGreater knowledge of local marketCan better apply specialized skillsMinimizes knowledge spilloverCan be viewed as an insiderHigher risk than other modesRequires more resources and commitmentMay be difficult to manage the local resources.
How could a business leverage its investment in information technology to build startegic IT capabilities that serve as a barrier to entry by new entrants into its market?
The cost of building and maintaining a strategic IT platform can be very expensive. Leveraging investment in IT: By investing in advanced computer-based information systems to improve efficiency, firms are able to develop new products and services that would not have otherwise been possible without their strong IT capability. Barriers to Entry: By increasing the amount of investment or the complexity of the technology required to compete in an industry or market segment can also discourage or delay other companies from entering a market
My assigment is if you have capital regard to buy a franchise what qusion would you asked before becoming a franchise holder?
Franchising as a mode of entry for foreign market
What is the new mode for entering into foreign market?
may turnkey projects help in entering in foreign market. may turnkey projects help in entering in foreign market.
What form of entry into a foreign market requires the least commitment?
indirect exporting
What is the entry mode for business in Japan?
Which mode of entry (i.e. licensing, franchising, strategic partnership, joint venture, wholly owned subsidiary, etc.) is most appropriate for entering a foreign country?
How to start market entry service to big companies?
et clear goals. ... Research your market. ... Study the competition. ... Choose your mode of entry. ... Figure out your financing needs. ... Develop the strategy document.
3 What are the alternative modes for intl market entry Explain them?
1. foreign licensing 2.sub-contracting 3. ???????? 4. PROFIT
What has the author Wei-ping Wu written?
Wei-ping Wu has written: 'A study of the determinants of EC firms' entry mode choice and performance in the Chinese market'
What is the foreign market?
A foreign market is any market besides the one based in a person's own country. For example, to an American, China would be part of the foreign market. But to a Chinese person, America would be part of the foreign market.
What is code entry mode on a LG?
356897432257
What is the Entry mode of mcdonalds into Indian?
franchise
What factors influence the choice of market entry method?
what factors influence the choice of market entry method?
What is foreign market manipulation?
manipulate in the securities of the FOREX(foreign exchange market)..
