In this class, we consider six options for entering foreign markets: export, license, franchise, greenfield, acquisition, and joint venture). Each is relevant in certain scenarios. Let’s take a look at four industries, where firms generally have similar business models. In these industries, what is (are) the best foreign market entry method(s)? Why?
We’ll consider the following:
Passenger airlines (Delta, United, British Airways, etc.)
Automobiles (Toyota, GM, Ford, Kia, etc.)
Food/beverage retail (McD’s, KFC, Starbucks, etc.)
Computers (Dell, HP, Acer, Samsung, etc.)
(It may help to do a little research and see how firms in these industries have expanded into foreign markets in the past.)
From the FDI lecture, remember that the type of FDI methods used by firms generally depend on four things:
The amount of control a firm needs over its operations in that country.
The amount of resources is will take to establish a presence using the entry method.
The risk that confidential information will leak out of its foreign operation.
The risk that the country or its business environment is not stable.