L6: GLOBAL MARKET-ENTRY STRATEGIES

A factor which is unrelated to licensing is:

• licensees have limited control.

• licensees have full autonomy.

• license agreements have short life.

• licensees can develop similar products.

________ provides technical specifications to a subcontractor or local manufacturer, who then oversees production.

• A joint venture

• Exporting

• Licensing

• Contract manufacturing

The agreements that allows McDonald's franchisees around the globe to use McDonald's trademarked name and menu items represents, in essence, which form of market entry?

• franchising

• joint ventures

•  exporting

• 100 percent ownership

What are the two key advantages that are associated with licensing as a market-entry mode?

Answer explanation

Two key advantages are associated with licensing as a market-entry mode.

First, because the licensee is typically a local business that will produce and market the goods on a local or regional basis, licensing enables companies to circumvent tariffs, quotas, or similar export barriers.

Second, when appropriate, licensees are granted considerable autonomy and are free to adapt the licensed goods to local tastes.

A(n) ________ is an entry strategy for a single target country in which the partners share ownership of a newly created business entity.

What factors are necessary for a proposed global strategic partnership to be successful? Identify the 6 basic factors.

Answer explanation

1. Mission. Successful GSPs create win-win situations, in which participants pursue objectives on the basis of mutual need or advantage.

2. Strategy. A company may establish separate GSPs with different partners; strategy must be thought out upfront to avoid conflicts.

3. Governance. Discussion and consensus must be the norms. Partners must be viewed as equals.

4. Culture. Personal chemistry is important, as is the successful development of a shared set of values.

5. Organization. Innovative structures and designs may be needed to offset the complexity of multicountry management.

6. Management. GSPs invariably involve a different type of decision making. Potentially divisive issues must be identified in advance and clear, unitary lines of authority established that will result in commitment by all partners.

Japanese keiretsu executives can legally sit on each other's boards, share information, and coordinate prices in closed-door meetings of "presidents' councils."

• TRUE

• FALSE

"Discussion and consensus must be the norms. Partners must be viewed as equals." When applied to global strategic partnerships, this statement indicates the importance of which factor?

• culture

• strategy

• governance

• mission

GSPs (Global Strategic Partnerships) are attractive for several reasons which do not include:

• sharing high product development costs.

• focus on a single national market or a specific problem.

• securing access to national and regional markets.

• sharing technological developments.

Which of the following is not true of Japanese keiretsu?

• blocks foreign suppliers from the Japanese market

• promotes long-term employment

• promotes risk sharing

• ensures low prices for Japanese consumers