Answer to Question #229197 in Management for Atif

Question

State four types of international expansion strategies?explain the advantages and disadvantages of each of them with relevant examples?

Answer 1

1. Exporting

Advantages

• Fast entry
• low risk

Disadvantages

• Low control
• low local knowledge
• potential negative environmental impact of transportation

2.Licensing and Franchising

Advantages

• Fast entry
• low cost
• low risk

Disadvantages

• Less control
• licensee may become a competitor
• legal and regulatory environment (IP and contract law) must be sound

3.Partnering and Strategic Alliance

Advantages

• Shared costs reduce investment needed
• reduced risk
• seen as local entity

Disadvantages

• Higher cost than exporting licensing, or franchising
• integration problems between two corporate cultures

4.Acquisition

Advantages

• Fast entry known
• established operations

Disadvantages

• High cost
• integration issues with home office