Question

In: Accounting

Assume that two rival coffee chains when entering Turkish market followed different entry modes. Company CWC...

Assume that two rival coffee chains when entering Turkish market followed different entry modes. Company CWC followed a greenfield approach and Company GLJ followed franchising. What can be the problems associated with each entry mode. (Hint: Base your evaluation on control over foreign activities and the amount of resource committed to the foreign market)

Solutions

Expert Solution

GREENFIELD APPROACH :- When a parent company creates a subsidiary in a different country, building its operations from the ground up this type of foreign direct investment is known as greenfield.These investment projects include the construction of new production facilities,the building of offices,distribution hubs,services etc.Here the parent company creates a new operation in a foreign country from the ground up.Also the company has great control over the branches.     FRANCHISING :- It is a kind of arrangement as well as agreement between two parties where the franchiser grants the franchisee the permission and the right to use the business ,products and the market of goods and services to use its own tag and trademark.A certain fee as well as a percentage of sale ,from the franchisee is asked by the franchiser .It provides the franchisee a good access to the talent,minimum growth risk,easy expansion capital etc.Here the franchisee has also the certain level of independene where he can earn easily and thus the franchiser is also benefitted. In the case of these above two coffee rivals who are established in Turkeywe see the problems associated with their entry and can look at them in the following manner :- **Greenfield:- *it is considered as the riskiest form of FDI,as it has high risk factors of investment (as mentioned above)     *greenfield entry is expensive in one go(barriers to entry). *it compulsorily needs local workforce. *it is easily affected by government regulations. **Franchising :- *they also possess high start up costs (but definitely different than greenfield) *they have some sort of independence but are limited. *profits are not fully guaranteed.        *franchise can be removed easily so it is a risk factor too . Here in the case of above two rivals and their entry modes the franchising mode is more favourable than the greenfield mode except some extraordinary circumstances where the franchisor may remove the franchisee's rights.Also the foreign factors exists and they are effective too.

Any doubt comment below i will explain or resolve until you got....
PLEASE.....UPVOTE....ITS REALLY HELPS ME....THANK YOU....SOOO MUCH....
Please comment if any querry i will resolve as soon as possible


Related Solutions

Assume that two rival coffee chains when entering Turkish market followed different entry modes. Company CWC...
Assume that two rival coffee chains when entering Turkish market followed different entry modes. Company CWC followed a greenfield approach and Company GLJ followed franchising. What can be the problems associated with each entry mode. (Hint: Base your evaluation on control over foreign activities and the amount of resource committed to the foreign market)
There are many barriers to entry when it comes to entering a foreign market, but the...
There are many barriers to entry when it comes to entering a foreign market, but the top three include monopolies, poor or inadequate legal protection, and corruption. please explain in further detail
Locate a minimum of 5 companies that employed different types of entry modes when they went...
Locate a minimum of 5 companies that employed different types of entry modes when they went global. Make a table, graphic, or infographic to show their strategies and why it was best for their product/services.
What factors should a company consider when entering a foreign market? Discuss three methods of entry...
What factors should a company consider when entering a foreign market? Discuss three methods of entry and three barriers to trade.
Provide and fully explain two reasons why the residual demand curve for a company producing a good in one market may have a different elasticity than a company producing a different good in another market.
Provide and fully explain two reasons why the residual demand curve for a company producing a good in one market may have a different elasticity than a company producing a different good in another market. Provide and fully explain the shut-down decision for a perfectly competitive firm in the short-run and the long-run. Is the shut-down decision the same for both? Why or why not?
Two years ago, when the market rate was 5%, your company purchased a fixed asset for...
Two years ago, when the market rate was 5%, your company purchased a fixed asset for $50,000. Starting a year after the purchase, fixed asset started to bring in $20,000 annual revenue with annual costs of $8,000. The expected lifetime of the asset is 8 years. You obtained your second cash flow today and due to the changes in the market, you will need to update your revenue, costs, as well as the interest rate. Going forward, annual revenue will...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT