Foreign Entry Modes Essay Questions Flashcards
examples of high control FEMs
startups (greenfield) & FDI
acquisitions
wholly owned subsidiaries
examples of medium control FEMs
licensing
franchising
local partners
examples of low control FEMs
exporting
indirect exporting
what are the four constructs that determine the efficiency of FEMs
- transaction specific assets
- external uncertainty
- internal uncertainty
- free riding potential
is integration recommended more when competition is high or low
low
what does a large international business environment in the foreign country suggest
confidence in the country
less control required
where socio economic difference great are high or low control FEMs recommended
low
as is challenging to navigate unknown environments
unless there is a clear advantage of doing business our way
should brands with reputations demand more or less control
more
to maintain brand value and image
what is indirect exporting
selling product to an intermediary who then exports the product
eg commodities, raw materials, parts
what is licensing
granting intellectual property rights e.g. patents, trademarks to companies abroad in exchange for royalty fees
example of firm that uses management services model
Hilton Hotels
example of joint venture/operation
Spotify and Tencent
why are joint venture medium control
sharing resources and risks taken
decisions must be negotiated with partner so diluted control
