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Import/Export Exporting
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Where most businesses start their international operations. Entry strategy with very little risk, instant foreign market knowledge, and no major resources (easy and cheap).
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Licensing Import/Export
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Entry strategy with no control once it gets there, so low reward, and product and company image may be damaged. An agreement that allows a company to use an industrial property in exchange for payment to the other party (manufacturing based).
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Licensing Licensing
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Entry strategy that’s profitable and gains access to markets, but also builds a future competitor. Company that gets with another company by joining forces, paying royalties to use the company’s name; once it runs out, you’re not allowed to make anymore (make a specific amount of
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products for a specific amount of time).
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Franchising Franchising
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A business arrangement where a company allows another company to operate an enterprise using its trademark, logo, and method of operation in return for a fee (service based). Entry strategy that uses a winning business formula with limited political risk, but lacks control.
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Joint Venture Franchising; Licensing
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While both entry strategies pay upfront fees and royalties, ____ deals with services while ____ deals with products. An agreement in which two or more partners own an overseas business, usually in the home country of one of the partners.
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Joint Venture Joint Venture
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Entry strategy that’s efficient and gains access to the market and skills of the local partner, but is difficult to find the right partner. Can be very profitable because it gets you instant access to a foreign country with networks and contacts.
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Joint Venture Joint Venture
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Two companies come together to form a brand new product (i.e. Smart Car with Swatch and Mercedes Benz). Entry strategy advantages include improvement of efficiency, access to knowledge, political factors, and collusion or restriction of competition.
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Wholly Owned Subsidiary Wholly Owned Subsidiary
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An overseas operation that is totally, 100% owned and controlled by the MNC. Entry strategy that can be very profitable with full control, but the host country may feel that the MNC is trying to drive out local enterprise.
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Joint Ventures Wholly Owned Subsidiary
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Physically build another company without a partner; do everything you want, but will lose it all if you fail.
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