Tesco Case Study

1921 WordsMay 4, 20158 Pages
A mode of entry into an international market is the channel which your organization employs to gain entry to a new international market. There are usually four main entry models, exporting, licensing, joint venture and direct investment. Exporting is the marketing and direct sale of domestically-produced goods in another country. Exporting is a traditional and well-established method of reaching foreign markets. Since exporting does not require that the goods be produced in the target country, no investment in foreign production facilities is required. Most of the costs associated with exporting take the form of marketing expenses. Licensing essentially permits a company in the target country to use the property of the licensor. Such property usually is intangible, such as trademarks, patents, and production techniques. The licensee pays a fee in exchange for the rights to use the intangible property and possibly for technical assistance. Joint venture mode is, that two or more firm join together to create a new business entity that is legally separate and distinct from its parents. It involves shared ownership. The key issues to consider in a joint venture are ownership, control, length of agreement, pricing, technology transfer, local firm capabilities and resources, and government intentions. Moreover, Joint ventures have conflicting pressures to cooperate and compete, for example, the partners want to maximize the advantage gained for the joint venture, but they also want to maximize their own competitive position. The last entry mode is direct investment, which is the direct ownership of facilities in the target country. It involves the transfer of resources including capital, technology, and personnel. Direct foreign investment may be made through the acquisition of an existing entity or the establishment of a new enterprise. Direct ownership provides a high

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