Suggested Answers to Discussion Questions
1. Why should a company consider expanding globally?
The most basic answer to this question is: Making the decision to enter international
markets is in the best interest of the company.
2. What are the alternative tools or strategies for expanding internationally? What
are the major advantages and disadvantages of each strategy?
Licensing
Advantages:
Disadvantages:
Joint Ventures
Advantages:
Disadvantages:
Direct Investment/Acquisition/Ownership
Advantages:
Disadvantages:
3. You work for a specialty process-control manufacturer in Indiana. The president
comes to you with a license offer from a Chinese conglomerate. In return for
sharing your company’s patents and process know-how, the Chinese company will
pay a license fee of 5 percent of the ex-factory price of all products sold under
license. The president asks for your advice. What would you tell her?
Assuming your company is a small manufacturer with limited international
experience, and assuming that the picture for both market and sales (market share)
potential are promising, licensing can be an attractive entry mode. It is possible that
entry into the Chinese market could be expedited by following this approach,
Source: Franklin R. Root, Entry Strategies for International Markets (New York:
Lexington Books), 1994.
4. What criteria should be assessed when evaluating potential global markets?
Six criteria should be assessed (p. 218):
6. Product Fit.
Market potential can be derived from secondary information especially government
5. Why would a firm consider forming a partnership with a competitor? What are
some examples of this being beneficial or destructive? In what industries has this
proved successful?
6. Why is there no ‘ideal’ market entry strategy?
There is no ‘ideal’ market entry strategy because there are so many variables that
