BU491 Chapter Notes -Joint Venture, Experience Curve Effects, Professional Wrestling Throws
Document Summary
Five main choices for mode of entry: exporting, licensing, franchising, entering into a joint venture with a host country company, and setting up a wholly owned subsidiary in the host country. Most manufacturing companies begin their global expansion as exporters and only later switch to one of the other modes for serving a foreign market. Exporting has two distinct advantages: avoids the costs of establishing manufacturing operations in the host country, may be consistent with realizing experience-curve cost economies and location economies. By manufacturing the product in a centralized location and then exporting it to other national markets, the company may be able to realize substantial scale economies from its global sales volume. Arrangement whereby a foreign licensee buys the rights to manufacture a country"s product in the licensee"s country for a negotiated fee. The licensee then puts up most of the capital necessary to get the overseas operation going.
