Question

How to Expand Honeywell from the U.S to Japan's markets A. Present chosen expansion method and rationale behind your choice. B. Choices - Franchising, joint ventures, strategic alliance, acquisition, Greenfield venture.

Answer 1

Solution:

Honeywell is a very huge company having revenue of more than $41 Billion. Given that it wants to expand to a new market - Japan

There are different methods / ways for any company do that:

1.Exporting 2.Licencing and /or franchising 3.Joint Partnership 4.Strategic Alliances and 5.Greenfield venture.

A. Present chosen expansion method

I think that Honeywell would choose the method 4.Strategic Alliance with a reputed brand in Japan

Rationale - The following are the reasons behind making this choice

(i) Developing new products / technologies - Since Japan is also as equally technologically developed as the U.S,it is critical that Honeywell comes out with new products / services which are specific to Japan .Ex: The US companies are specialized in the production of large cars and vehicles whereas the Japanese are known for producing everything in a small,compatible size.So,the new product developed can have the U.S technology and Japanese design.Then it would be of high demand in the Japenese Market.

(ii) Forming Economies of Scale

(iii) Honeywell can Reduce it's risk to Japanese Market by sharing the risks with strategic partner

(iv) Help during Entering the new markets - The already well established Japanese company can be responsible for marketing activities whereas Honeywell can provide the technology required.

Ex: Hero Honda brand bikes in India (Hero of India and Honda of Japan have entered into a strategic partnership where Hero looks after the marketing activities and distribution and Honda provides the technology and product required)

(v) Overcoming and Enhancing competition in the Japanese market.

B.Franchising is not a choice even though it is one of the cheapest because there is a risk of competition in future from the Japanese License and also risks of IP rights violations etc.,

Joint-Ventures - It requires much larger investments,risk of potential conflicts from the partners in future and lack of personal asset protection

Green-Field Venture - It is a very risky ,requires very high investment. costs and also expertise in the Japanese market which will require a lot of time to acquire.Also too much R&D expenditure to understand the Japanese market ,develop the product and subsequently releasing  it in the market

Hope this solution helps!! Please give a "Thumbs Up" rating for this solution !!