Would a multi-national enterprise following a global standardization strategy be more likely to choose licensing, franchising,...

Would a multi-national enterprise following a global standardization strategy be more likely to choose licensing, franchising, a joint venture, or a wholly owned subsidiary when entering a foreign market? Explain your reasoning

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Expert Solution

Licensing is to give permission to sell the product on temporary basis. Buyer has to convince about the product, work through legal requirements in the country, get necessary government agreement to sell in the country. Control over the product is still with the licensor.
Franchising works well for existing brand valued products, sells easily in the new market. Franchisees pay fee and at times a portion of the profits. However, one has to search for location and other local operating jobs to get hold of the business.
Joint Venture is to link-up with another company and share the profits, working separately. When venturing into different product line, in different locations this method is more suitable.
WOS: wholly owned subsidiary immediately get hold of the market share with existing customer base and brand value in the foreign country. Better to opt this, when the product line is in very much demand. Due-diligence of the acquiring company is a herculean task. Similar operations, quick human skill-set acquisition is the key.

jeff jeffy answered 1 year ago

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