Question

In essay form, discuss.

400 words

------------------------------

Typhoon Foods, Inc. is considering expansion into Latin America. The CEO of Typhoon has come to you for a recommendation on the best market expansion approach.

Choose one of the market expansion approaches we discussed in class (E-Commerce, Licensing, Franchising, FDI, or Joint Venture). Explain what that expansion approach is in your own words and make a strong argument for why it is the best approach. Do a comparison / contrast with at least one other expansion approach.

Answer 1

I would recommend franchising for Typhoon Foods. Franchising is the best way to expand into new locations with less risk. Franchising involves signing contract with another company to sell the products using Typhoon’s name and reputation. Typhoon Foods can use their own name and image to attract new customers and expand the business using the franchisee’s resources. They can also train the franchisee to perform to the standards expected from Typhoon Foods. The company involves in franchise relationship needs to pay a specific amount as initial fee and help Typhoon foods to operate their business according to their business plans. The franchisee would invest their assets and skills in the business and help Typhoon Foods to succeed in the particular area. The franchisee would pay a portion of the profit to Typhoon and Typhoon can make financial advantage with comparatively less investment. The franchisee would have good knowledge on the location and the culture. They can help Typhoon Foods to develop plans to succeed in the area and would present better ideas as it would help them also to succeed. All the main requirements of a business to expand into a new market is being satisfied by the method of franchising including less risk, investment from the partner, better resources and skills, and profit. Hence I feel it would be best to adopt franchising for expansion.

If Typhoon Foods try to expand using joint venture, they need to undergo more risk. The two companies which involve in joint venture bring new product or service to the market to make profit. Both the companies should have same level of expertise to involve in joint venture; else the chances are there that the partner with higher expertise may overrule Typhoon management. There are more chances of disagreement in joint venture as both parties have same power for decision making. Moreover franchisee relationships continue for long time but a joint venture ends after a given period of time. Ecommerce is more risky and may not be a better strategy because selling food products over internet is not advisable if adequate transportation and proper storage cannot be guaranteed. Food products may degrade if proper care and planning is not guaranteed while shipping the products.