Question

Describe in detail the several common entry strategies for international operations (The most common entry approaches are: wholly owned subsidiaries, mergers and acquisitions, alliances and joint ventures, licensing agreements, franchising, and basic export and import operations).

Thank you!

Answer 1

Several common entry strategies for international operations are:

- Wholly owned subsidiaries: In such a situation the entire stocks of the child company is with the host i.e. parent company so parent company has the financial control over the child but having said that we have to acknowledge the fact that the management and employee structure is still decided by the child company.

- Mergers and acquisitions: Merger means that one company form a collaboration with another company and both the companies enjoy the assets of each to increase their revenue and market share. Acquisitions means when one company comes in and complete buy the other company.

- Alliances and joint ventures: A joint venture is usually for a particular objective wherein 2 companies shake hands and pledge to share the resources to achieve a shared objective. Alliances is quite simple in the terms that both companies agree they need each other and work together to achieve more.

- Licensing: In licensing one company can enter an international market by paying the existing company a fee for manufacturing its product and sell it.

- Franchising: It is most common used one where standards have to be followed to sell products of one company. Usually a company buy franchise for a specified time and can maintain the standard to sell the products.