question archive You do know major modes of International Business
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You do know major modes of International Business. Being analyst you are required to explain that which modes of International Business you are directly beneficiaries and how? Which modes of International Business you are directly damaging and how?
the five major modes are
Franchising and Licensing
Exporting
Acquisition
Partnering and Strategic Alliance
Greenfield Venture
Please look at the attached table for more details
Damaging modes:
Exporting: The prices of shipping of commodities, which can have a strong and detrimental influence on the climate, are one of the drawbacks of exporting. Therefore, some countries levy incoming products tariffs which affect the income of the product. Moreover, companies who sell and supply goods through a contractual arrangement have less influence over these activities and will, of course, pay a premium for such services to their distributor.
Greenfield Venture: The formation of a new fully owned division is always complicated and often costly, yet it allows the business greater leverage and has the highest ability to deliver above-average returns. Due to the expense of starting up a new company in a foreign market, expense and danger are important. The organisation will gain the know-how and experience of the local industry by hiring either developing countries - likely business firms - or costly consultants. The downside is that the organisation has a leverage of all its operations.
Good modes
Franchising: The selling of franchises is another common way to expand abroad. The franchisee undertakes to allow a global business to use its name and to market its goods or services, under an overseas franchising arrangement. The franchisee is responsible for all operations but agrees to operate following the franchiser's business model. The franchisor offers typically ads, instruction and encouragement for new goods. Franchising is a natural form of global expansion, including for restaurant chains such as McDonald and Kentucky Fried Chicken, hotel chains like Holiday Inn or Best Western, for companies operating domestically under a franchise model.
Strategic Alliance: What if there is no experience or money for a corporation that needs a foreign nation to do business? And what if, when the target country government has a local sponsor, international businesses can not work across their frontiers? Throughout these situations, a corporation can establish a strategic partnership with a nearby business or even with the administration itself. A strategic alliance is an agreement between two enterprises (or one company and one country) that pools resources so that both partners can achieve business objectives. For starters, Viacom (the global leading media company) produced Chinese music and entertainment programmes in a strategic partnership with Beijing Television.
Acquisition: To select the size required, procurement is a good entry strategy, particularly in some industries ( e.g. wireless telecoms). For the case of restructuring, the merger is always a viable tactic. Nonetheless, investments are unpredictable. Nevertheless. Several reports have found that the stock valuation of the purchased business will not rise between 40 and 60% in all acquisitions by more than the spent.
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