Homework Question on The Global Market
- Identify the strategies for entering into the global market.
- Assess the strengths and limitations of each. Give an example of a company that has made a success of doing business in the global economy.
- What lessons from McDonald’s success in the global marketplace are transferable across industries?
Homework Answer on The Global Market
A company can utilize various ways to foster the business’s presence in multiple countries and regions. According to Kay, strategies for entry into the global market are:
Partnership – co-working with another company. Its benefits include separation of legal entities, complications for tax reasons are a major problem
License agreement – enables for operation in a foreign country through licensing by parent company. It promotes loyalty and lowers the risk of loss of intellectual property
Franchise agreement – the business model is replicated but under independent entities. Advantages include brand recognition and revenue. Problem include maintaining standards
Joint venture – allows for joint efforts. Advantages include ease of entering markets, overcoming regulatory and legal hurdles and cutting down costs of entry. Disadvantages are in sharing responsibility and limited options in case of exit.
An example of a company that has been in successful doing business in the global economy with the above strategies is the Coca Cola Company. With its various business units and products, and headquartered in the US, it has formed partnerships, has had license agreements, franchises agreements and joint ventures in countries they operate. Their main business is soda, which are manufactured and packed by business entities that have licenses and agreements for their production.