Question

Market entry strategies(Joint venture or Licensing)

Which market entry strategy do you recommend for an American automaker as the best option to enter china for their solar powered vehicles and why? Please need a longer answer and explanation.

Answer 1

The market strategy that I think would be suitable is joint venture. Joint venture enables entry into a market easily. This is because there are various advantages to this strategy which include:

1. Joint venture with local Chinese companies will give expertise. It will be easier for the American company to understand the Chinese market and other factors well.

2. It is temporary- After the American company has gained expertise and understanding of the market, they can exit the joint venture.

3. The risks of entering new market are reduced- As both companies share risks, the American company will solely not have to bear the risks.

4. A joint venture also helps increase the capacity of operations.

Licensing on the other hand has some disadvantages which include the fact that this strategy presents lesser income opportunities when compared to other strategies. There is also a higher risk to reputation damage.