Essay about AB220 Unit 8 Assignment
1. Compare the advantages and disadvantages of acquiring the existing firm, and continuing production in Korea through acquisition for Zip-6.
2. Compare the advantages and disadvantages of re-purchasing the licensing agreement and either establishing Zip-6 subsidiary through Greenfield venture and producing in South Korea, exporting the product to Korea, franchising to another firm or relicensing to another firm.
3. State your choice of options to pursue and reasons for this choice.
1. If you get it right, there can be many good reasons why buying an existing business could make good business sense. Remember though, that you will be taking on the legacy of the …show more content…
Advantages of the international franchising are:
Low political risk
Allows simultaneous expansion into different regions of the world.
Well selected partners bring financial investment as well as managerial capabilities to the operation.
Franchise may turn into competitors.
Demand of franchisees may scare when starting to franchise a company, which can lead to making agreements with wrong candidates.
A wrong franchisee may ruin the company’s name and reputation in the market.
Comparing to other modes such as exporting and even licensing, international franchising requires a greater financial investment to attract prospects and support and manage franchisees. The key success for franchising is to avoid sharing strategic activity with any franchisee. Especially for Zip-6 Co they do have a secret ingredients to their soft drink. Sharing those strategic activity may increase the potential of the franchisee to be their future competitor due to the knowledge and strategic spill over.
Greenfield investment is establishment of a new wholly owned subsidiary, its often complex and potentially costly, but it is able to provide full control to the firm and has the most potential to provide above average return. Greenfield is more