Case Scenario:
Your company, Formulae Inc., based in San Francisco, provides a premium infant formula to all major U.S. markets and a less-successful but growing line of economically priced, enriched baby food. The company has made a decision to expand globally. Formulae currently has 2,000 employees in the United States and wants to double its personnel within the next 4 years to help meet increasing product demand. Research has provided data to suggest there is huge growth potential to dominate in an emerging off-shore marketplace, especially among the new strata with disposable income and increasing interest in ready made, time-saving food products. Formulae has made the decision to expand into Guatemala first and, if successful, Mexico next. As a key member of the expansion team, you will be a lead player in ensuring this new venture is a success. You will be responsible for providing assessments, analysis, and written plans for successful expansion of the firm's business internationally/globally. Extensive travel may be required. Formulae's senior management believes that expanding into the international market and doubling the size of employee base within the next 4 years will impact profitability in the short term but will more than double profits over the long term.
You have now been charged with outlining the advantages and disadvantages of each type of major ownership structure and making a final recommendation of which organizational structure Formulae should choose when entering into a foreign market.
The structures that who can choose from are: wholly owned subsidiary, mergers/acquisitions, alliances and joint ventures, licensing, franchising, and export/import
Part 1
Pick one of the structures listed above. Then you must write a 1000-word summary on why or why not the particular structure(s) is (are) a good fit for Formulae. I HAVE CHOSEN FRANCHISING FOR THIS PART.
Part 2
Once Part one is completed look at all the structures and decided why is your chosen structure is best for Formulae. Make your recommendation in the form of a formal recommendation with rationale to the board of directors for Formulae. Your 1250-1500 word rationale should include an exploration of the rejected models for Formulae and the chosen structure. Be sure to make your choice clear. Give a concise and thorough explanation along with the rationale for the group's choice.