Entering New Markets
The company enters markets in the global business environment through joint ventures and licenses every day. Licensing is a contractual agreement where one company uses another company’s intellectual property such as patents and designs. The licensees do so to reduce the risk of the market. One common brand that adopts the franchising model of licensing is McDonald’s. The company allows local companies to pay franchise fees, and, in return, they get the terms of operating the business. They are also allowed to market and use the brand name. MacDonald will occasionally evaluate the quality and the entire business. Jaguar is also a company in the UK that uses a private label manufacturing licensing model (Jayachandran et al., 2013).
This is where a local company in a different country manufactures a product and sells under the brand name of Jaguar. This makes it easy for the Jaguar brand to enter new markets, while another company can produce Jaguar quality products.
Some companies have expanded from joint ventures and formed strategic alliances with other companies and foreign entrants. A good example of a joint venture is Pepsi and Starbucks. The two companies formed a third company to achieve a common objective. The joint venture was established in 1994 to produce ready-to-drink coffee products. The North American Coffee Partnership has been successful having received resources from giant successful companies. The flagship product Frappuccino allowed Starbucks to enter the bottled beverage market, and Pepsi obtained a new product from a well-known brand. The beverage’s ready-to-drink coffee beverage has a market share of 95% in different countries (Insights, 2017). In short, the company chooses to enter new markets through different channels such as licensing and joint ventures. This not only reduces the risk, but also ensures the success of the joint venture through the support of the parent company.
WEEK 6 MAIN DISCUSSION POST
Licensing is among the commonly used forms of foreign market entry strategies. The strategy entails entering into a license agreement whereby a local company gives a foreign company the rights to use its name, brand, and intellectual property, in the foreign market. The strategy is preferred because of its low costs of entering foreign markets, although the companies may lose significant control over their businesses. Some key companies using licensing to support their global business expansion include Disney Consumer Products and the Pentland Group. Disney is American-based, with its headquarters in Burbank, California. The company operates in the retail industry. Pentland Group is a British-owned company, and in the year 2008, it licensed a significant percentage of its products, such as the Hunter, Brasher, Speedo, Ellesse, mitre, among others. The licensing strategy has proved to be an effective foreign Market entry strategy, as the two companies have established their brands appropriately in the international markets, thus recording high sales and profits (License Global, 2020).
A joint venture refers to a situation whereby two or more companies work together towards achieving a common goal. There are numerous successful joint ventures, among the highly notable ones being the NBC Universal Television Group (Comcast) and Disney ABC Television Group (The Walt Disney Company). The two companies joined their operations back in 2018, intending to create a video streaming site or an application known as “HULU.” The designed website was expected to support high-quality video streamlining, accessible using electronic gadgets like computers and smartphones. The joint center was a huge success, with a product offering of up to $1 billion, thus increasing the two companies’ value (Thakur, 2021).
2. Please review the process and outlines of other students, providing an objective assessment and constructive feedback that will help strengthen the effectiveness of their efforts and the quality of their finished products.
In reviewing some of my classmates outlines I see that everyone seems to be on the right track. There are many different formalities and directions that most of us are going in, however I see everyone is being very detailed and organized. I can also see there is much research and preparation going into this project.
4. What is the purpose of a Key Operating Principle?
The key purpose of operating principles is to make certain people are focused on doing the right things. It helps in making the right decisions and how to come collaborate and come to those right decisions. When there are conflicting situations, organizations use the operating principle to help with the solving of those issues.
5. What sort of additional material would best ensure success of the project? Why?
To have a successful project, collaboration, communication, and team work is a must. Also, there can be additional material that can be used, like actually interviewing key role people in an organization or one whom has just started a business to find out how they put together their business plan. Also using school resources that have been provided will help in a successful project.
Mission statements can allow individuals to see what an organization is all about. The essential elements are the customers, markets, technology, philosophy, self-concept, concern for public image and employees, concern for survival/growth and profitability and products/services. The customers are who the targeted demographics are. The major products/services offered by the company and the market are included. These two elements help in knowing where and with which products/services the company focuses on. The concern for public image and employee refers to the company attitude and public image. This is important because brand name and how consumers perceive you is important to profitability. The concern for growth and profitability reinforces the efforts and determination of the organization to find financial success. This is tantamount to self-concept and determining the competitive advantage of the company. This connects to technology and the organization using relevant systems to stay current in the industry.
Operating principles define how an organization operates to be successful in their given industry (Austin, 2019). The purpose of key operating principle is to show the boundaries upon which the organization conducts itself. This includes expectations such as sustainability, employee focus, etc. that help establish the frame the organization is operating. It also show the alignment of the organization to the mission/vision in how the operating principles connect to the goal of the organization.
There are several additional materials that would ensure success of the project. Determining leadership style and company culture would help in reinforcing the business plan so that stakeholders are able to see how employees will be best motivated to achieve the goal of expansion. Also, identifying strategies to have the competitive advantage or if there are any collaborative strategies that will be implemented. Collaborative strategies, for example strategic alliances, allow companies to work together for a mutual benefit (American InterContinental University [AIU], 2021). Including strategies that will be implemented to bring success to the project adds strength to the proposal of the project. The implication is showing focused efforts that will establish success.
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