Entry Strategies
Direct Exporting
Franchising
Licensing
Partnering
Joint Ventures
Advantages
Piggybacking
Turnkey Projects
Buying Company
Greenfield Investments
An arrangement where a firm transfers the rights to the use of a product or service to another firm.
Advantages
Disadvantages
Creates an easier entry into foreign markets
Low risk high reward for both parties
Main company has reduced risk for manufacturing product and the lincensor has reduced risk for selling the product
Creates new business opportunities
Having a licensor can help the company jump some border requirements to get products overseas faster
Requires less money to start a business opportunity because you can purchase a license instead of an ownership.
Advantages
Revenues are not guaranteed
Creates competition
Only offered for a limited time
There will always be an expiration date for the licensee
If the licensee can not generate revenue then there will be none
Many licensees become competition for the licnensors
Disadvantages
Broaden target audience
Will likely increase debt load
Creates economies of scale
Culture values from both companies may clash
They do this by reaching out to the audience that the existing company has already attracted
It increases production by lowering production costs
This can happen if the company bites off more than they can chew
The staff from the new company may disagree with your values
Advantages
Disadvantages
May not be able to deal with consumer problems as quickly than if they were with a agent
Very difficult to execute with good results
Greater bond between company and consumers
Quick feedback from consumers
Profits can be bigger
Company sells directly to consumers therefore they create trust between the consumer and the company
Because the company sells directly to the consumer the company can get feedback from its target audience allowing it to improve weak points.
It requires so much money and man power to actually use this method effectively
With little support for the company it would be hard for a local business to deal with customer service
Advantages
Disadvantages
High Risk High reward
High risk in the company name
Growth in labor leads to growth in profits
Being fully invested can lead to massive profits
By having many stores or operations this leads to a growth in labor which then produces a growth in sales
Franchisees may be more skilled than employees at making a company grow
By having multiple operations the managers can be highly motivated to help the company grow because if they fail or do a bad job it directly reflects them.
One wrong move can ruin the whole companies reuputaion
Very expensive investment
It costs a hefty amount money to open multiple operations and hire the required staff
Franchisees can be unpredictable
Sharing private info with franchisees can cause future competition and sometimes the franchisees may have different goals for the franchise
Disadvantages
New Ideas and able to learn new tricks from one another
Better access to resources and staff
Split priorities
Both investors share the risk and split the cost of things making it cheaper and safer to start the business
Sharing knowledge and ideas can create more creativity and more innovative ways in doing business
By using 2 different companies this can lead to better and more connections and staff specialists and also more outside resources
Can have communication issues between everyone involved
Both companies can have different views towards things and may not explain everything thoroughly or they may not exactly understand correctly some ideas that are said
Splitting up the pay would be difficult
Splitting up the pay can cause problems in agreement if one company is doing more for the venture than the other it could be unfair
Disadvantages
Advantages
Advantages
Disadvantages
HIgh level of control over operatiions
Advantages
Disadvantages
Projects can be oversized due to lack of information on the project
Much easier to own and manage
By giving the responsibility of the project to one contractor it makes it that much easier to manage because it takes certain things off of the plate and allows the owner to focus on other things
Makes it cheaper to start
Better for smaller projects
It is a lot less expensive when everything goes through one contractor
Usually have a limited budget so it is better for smaller companies
Can be tough to get an offer
They use a process highest bidder wins so it can be hard for the smaller companies to get a bid
Low cost and low risk
Advantages
Disadvantages
Gives cheap access to the product
The rider does not need to invest in research, development, or testing
Can be easy and safe
Smaller companies may lose control over their own product
Problems maintaining quality
The cost and risk is split between the partnership
Future complications
Lack of stability
Can be complications in the future if someone bails
Things can be unpredictable if your partner switches up
Responsible for liabilities
You are responsible for any mess ups
Better work/ life balance
By having a partner it can lighten the load
Bypassing trade restricitons
high market entry costs
High risk investment
Helps economy where company is positioned by creating jobs