Question

1. When would you use Exporting vs. an Alliance vs. Direct Investment?
2. What is meant by a right vs. right decision?
3. What are the reasons a company might change its structure?
4. How a partnership works relative to % of ownership?

Answer 1

1.

Exporting	When a firm has limited risks and expenses, abundance of resources, and proper knowledge of foreign markets.
Alliance	When a firm does not have access to it's target segment or does not have economies of scale or say a firm has higher financial risks.
Direct Investment	When a firm needs access to a foreign market, access to resources and it needs to reduce its costs of production

2. The dilemma associated with a situation where a decision has to be made between two or more right decisions, is a right vs. right decision.
e.g. A decision between short-term profits and long-term profits for a firm

3.
A company might want to change its structure for the following reasons :

• To react to changes in product demands
• To keep up with competition
• To enter new markets
• To scale-up as a business
• For overseas and cross-country expansions
• To change management or merge with another firm

4. In every partnership , among two or more partners, the owners are rather co-owners where each co-owner has an equal share in investments and also profits/losses, unless mandated by contracts differently.
e.g. For a partnership with 2 co-owners having equal share, both of them have 50% ownership, while if a contract is signed where one owner is responsible for 2/3rds of the company, then he/she would have 67% ownership while the other has 33%.