For the past 7 years, Zip-6 has been produced and sold in South Korea through a licensing agreement with the Korean beverage firm Lotse Tsangsung through its Chang Dow Trading Co. subsidiary. Mr. Jung Park, Lotse Tsangsung CEO recently visited Ravi and Keith in Atlanta and revealed that his firm was about to acquire its leading rival in the Korean market and as a result, wants to sell its Chang Dow unit. Mr. Park has approached Ravi and Keith with two proposals. First, Lotse Tsangsung is willing to sell Zip-6 its Chang Dow subsidiary. This would represent an acquisition for Zip-6 in the Korean market. Second, if the two firms cannot agree on terms for a purchase of Chang Dow, Lotse Tsangsung is willing to sell its licensing agreement back to Zip-6 which will effectively allow Zip-6 to produce and distribute its products directly within Korea. This would involve a Greenfield Venture. Based on your reading of the Greenfield Venture or Acquisition Section in the Hill text on pages 434-438, your Assignment is to address the following in your paper:
- Discuss the pros of both options (acquisitions versus Greenfield ventures) for Zip-6
- Discuss the cons of both options (acquisitions versus Greenfield ventures) for Zip-6
- State your choice of options to pursue and your reasons for this choice.