UCF GEB 3375 Final exam (Graded A+ actual test)

Market Screening - Firm is able to identify desirable markets Country screening (Ex. Brazil) First screen (Basic needs potential) - Influenced by climate, geography, natural resources. Some needs easy to assess(Industrial goods) while others are harder (Desire for chocolate). Data incudes Imports, local production Second Screening (Financial and Economic Forces) - market indicators: economic data used to measure relative market strength of countries or geographic areas ex: market size, market growth rates, ecommerce readiness market factors: economic data that correlate highly with market demand for a product ex: demand relationships for a product Third Screening (Political and Legal Forces) - entry barriers-restrictions on imports, law permits government controls- even if there are no barriers to entries and gov may set limits of reparations of earnings stability of government policy- continuity in policy when there is a change in leadership? intervention of armed forces, fighting among government leaders political climate, do businesses adapt and thrive as long as conditions are stable political stability- do leaders change often Licensing - An arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified period of time in exchange for royalties or other compensation how it works-the licensee pays the licensor a fixed amount upfront and an ongoing royalty on sales initial costs of transferring the licensed asset to the licensee, including training, engineering, or adaptation.Licensing: Responsibilities of licensee/ licensor - Licensee: provides compensation through lump sum payment, down payment plus royalties, products, know how, cross licensing licensor: provides intellectual property, trademarks, patent, design, or know how and supporting products (parts, components, materials, ect) Advantages for licensor •Low investment •Low involvement •Low effort, once established •Low-cost initial entry strategy Disadvantages for licensor •Performance depends on the foreign licensee •Licensor has limited control over its asset(s) abroad •Runs the risk of creating a future competiton Disadvantage of licensing - -fear that licensee will become a competitor -Low control -Revenue dependent Trademark licensing - Involves a firm granting another firm permission to use its name/logos in connection to certain products for a royalty fee Copyright Licensing - Involves a contract in which the focal firm provides technological or management knowledge about how to design, manufacture, or deliver a product or a service (common in semiconductor or pharmaceutical industries). Franchising - arrangement in which the firm allows another the right to use an entire business system in exchange for fees, royalties, or other compensation. Know-How licensing - Allowing another company to know your processGreenfield Investment - Starting from scratch Advantage: High Control Disadvantage: Expensive, a lot of time Joint- Venture - venture set up by two or more firms to pursue a specific objective. The idea is that every partner in a JV contributes some specific assets, skills or expertise that are needed to a successful "new firm. Turnkey Contract - arrangement where a firm plans, finances, organizes, manages, and implements all phases of a project abroad and hands it over to a foreign country after training local personnel. • Typical in the construction and engineering services industries. Management Contract - a contractor supplies managerial know---how to operate a hotel, resort, airport, hospital, or other facility in exchange for compensation (Kind of like consulting) What entry strategies would work for OTSC? Which wouldn't? - Exporting, licensing, wholly owned subsidiary, joint venture WOULD work. Franchising WOULD NOT work Indirect Exporting - Contracting with an intermediary in the firm's home country to perform all export functions. Often an export management trading company, or trading company. Common among firms new to exporting. Direct Exporting - Contracting with intermediaries in the foreign market, such as distributors or agents, to perform export functions. They perform downstream value-chain activities in the target market.Company Owned Foreign subsidiary - Similar to direct exporting except the exporter owns the foreign intermediary operation; the most advanced option Advantages of exporting - Larger sales greater market share larger profit margins vs home utilize economies of scale diversification least expensive foreign entry type least risky foreign entry type