Mastering Strategic Management As of early 2011, KFC was opening a new store in China every eighteen hours on average.

Mastering Strategic Management

As of early 2011, KFC was opening a new store in China every eighteen hours on average.

Wikimedia Commons – CC BY-SA 3.0.

Key Takeaway

• When entering a new country, executives can choose exporting, creating a wholly owned subsidiary, franchising, licensing, and creating a joint venture or strategic alliance. The key issues of how much control a firm has over its operation, how much risk is involved, and what share of the operation’s profits the firm

7.5 Options for Competing in International Markets 238

gets to keep all vary across these options.

Exercises

1. Do you believe that KFC would have been so successful in China today if executives had tried to make their first store a wholly owned subsidiary? Why or why not?

2. The typical joint venture only lasts a few years. Why might joint ventures dissolve so quickly?

239 Mastering Strategic Management

7.6 Conclusion

This chapter explains competition in international markets. Executives must consider the benefits and risks of competing internationally when making decisions about whether to expand overseas. Executives also need to determine the likelihood that their firms will succeed when they compete in international markets by examining demand conditions, factor conditions, related and supporting industries, and strategy, structure, and rivalry among its domestic competitors. When a firm does venture overseas, a decision must be made about whether its international strategy will be multidomestic, global, or transnational. Finally, when leading a firm to enter a new market, executives can choose to manage the operation via exporting, creating a wholly owned subsidiary, franchising, licensing, and creating a joint venture or strategic alliance.

 

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