Question

1.How is joint venturing riskier and complex than merely exporting?

2. Identify and describe the three product strategies a company entering a foreign market can use.

Can you please help me out to answer those two homework.

Answer 1

1. A joint venture is a business agreement between two or more parties where they agree to pool their resources to accomplish the specific goal. It could be for a new project or for any other business activities. International JV occurs when two business based on two or more countries forms a partnership deed to expand the trade internationally.

Limitation of IJV are as below-

a) There is risk in technologies both the companies use

b) Risk of disclosure of secrets between the companies

c) Conflicts, the battle of control may occur

d) There is no direct dealing of a particular company in the global market and thus it lacks the supreme power that gains from exporting

e) Risk of recovering the full capital

f) A different view of expected benefits can ruin the market strategies.

2. Product strategies, always connected with the market strategies, and both are inseparable. Thus selecting the best market strategies can come up with then est product positioning strategy. The most effective strategies for a company who wish to have a foreign market deals are as below-

a) Direct exporting: Here, the exporter can choose the market in which the product to be sold out and can experience the full authority. The benefits can be enjoyed at full and the risk from capital recovery can also be limited. Agents and distributors work closely in the same way the exporter works.

b) Licensing: This is an agreement where the exporter gives the full rights of using the product for sales to another company which is located in the foreign market. This is due to the lack of foreign market knowledge. This can be done for marketing or production. The risk of loss from the business can be limited to a great extend.

c) Franchising: It is a form of market expansion giving rights to open an outlet in different parts of the world. The outlet owners can use the brand for sales. But bounded with common laws established by the franchise. This is applicable for only well-established companies, for the strategy of expansion.