Assignment task: Compare the different entry modes that firms use to enter foreign markets.
In the Module 4 Assessment, you will have the opportunity to apply research to recommend a course of action for a given business scenario regarding foreign market entry considerations. Once a company has decided to move into a new foreign market, it must first weigh up the potential benefits and costs. If foreign market entry is being considered, the organization's strategic mission, vision, and values will drive market entry mode choice.
Scenario: You are the owner of a small U.S. based coffee distributor. You sell not only coffee but also related products such as branded mugs. For the past 3 years, your company's branded coffee mugs have been produced and sold in Norway through a licensing agreement with Norwegian firm Drikke AS through its "Kaffekopp" subsidiary. The Drikke AS CEO, Espen Foldnes, recently visited you and revealed that his firm was about to acquire its leading rival in the Norwegian market and, as a result, wants to sell its Kaffekopp unit. CEO Foldnes has approached your firm with two proposals.
First, Drikke AS is willing to sell you its Kaffekopp subsidiary outright. This would represent an acquisition for you in the Norwegian market.
Second, suppose the two firms cannot agree on terms for purchase of Kaffekopp. In that case, Drikke AS is willing to sell its licensing agreement back to you, which will effectively allow you to formulate a new strategy for your company in Norway.
Assignment Checklist:
1. Identify one advantage of acquiring the existing subsidiary and maintaining production in Norway.
2. Identify one disadvantage of acquiring the existing subsidiary and maintaining production in Norway.
3. Explain one advantage of repurchasing your licensing rights in Norway.
4. Explain one disadvantage of repurchasing your licensing rights in Norway.
5. Describe the most advantageous method for establishment of a new production subsidiary in Norway through ONE of the following entry modes:
- establishing a Greenfield venture
- exporting your American-produced mugs to Norway
- franchising to another firm
- re-licensing to another firm in Norway
6. Summarize your final decision based on the available options. Be sure to provide support for your choice.
7. Utilize at least three external sources as part of your research. Sources might include your textbook, or any other academically credible resource found in the university library. Only sources cited within the body of the paper should be included in the reference list.