GMS 200 Lecture Notes - Lecture 5: Intangible Asset
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GMS 200 Full Course Notes
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Types of market entry strategies: non-equity modes. Licensing/franchising agreement: equity modes or direct investment strategies. Licensing refers to offering a firms know how or other intangible asset to a foreign company for a fee, royalty, and/or other type of payment: advantages for the new multinational. The need for local market research in reduced. The licensee may support the product strongly in the new market: disadvantages. Can lose control over the core competitive advantage of the firm. The licensee can become a new competitor to the firm. Joint venture : a corporate child , a new entity given birth and owned jointly by two or more parent companies, three possibilities. Mergers and acquisitions: accounts for 70% of all fdi, quick way to enter new market, gain market power. Wholly- owned subsidiary: 100% investment in production, local subsidiary, more control and more risk. Stage 2 direct exporter, via independent distributor. Stage 3 establishing foreign sales subsidiary.