Part A. International market entry modes short answer (2 sentences each)
A1) Explain the advantages of exporting as a mode of entry into a new market.
A2) Why is licensing an easy way to enter a new market?
Part B. Uncle Art´s water company mini-case
Summary of the company situation:
Your ‘Uncle Art' currently runs a water bottling business in Terre Haute Indiana. He currently sells half liter plastic bottles of purified drinking water under the label Bloomfield Springs. He is set up in a 40 X 60 facility that runs year round. He is selling in Indiana and the Louisville area as a mid-priced bottler. He could increase production with little extra investment. Uncle Art bottles the water and then ships the bottles by truck to the surrounding states in corrugated boxes. Water could be shipped in bulk and then bottled in another facility if one existed in another location.
The domestic water bottling market is very competitive and he is considering his international options. One brand of luxury water, Fiji, has sold well worldwide...so shipping distance is not a limitation in the premium water market. This is where you come in. He is considering entering the Mexican market. He knows that there is a shortage of drinking water in Mexico City that is getting worse.
Uncle Art knows you are about to graduate from the Scott College of Business and wants your help planning his company´s entry into the Mexican market. Over coffee at the Executive Express Café, he asks you to prepare a short report that addresses the questions below. You seek to impress him with your ability to apply concepts from what you have been working with in your strategy class, especially the recent global and international business chapter.
Motivations for international business.Answer questions 1 through 3 in order to explain why Uncle Art is motivated to compete internationally by each of three main motives for international trade
B1) Diversification of business risks.
B2) Explain to Uncle Art what political risk is in the context of his new venture? (Giving the book´s definition does not constitute an answer...adapt it to the circumstances...for example, ¨If.... Happened, then...would result. This matters because....¨ would be a good way to frame your short answer.
Part C. Spicy Greeks mini-case.
Market research revealed that consumers in Greece were very traditional and demanded high quality, rich flavor, and natural ingredients in all aspects of their food. You are considering starting a new line of gourmet sauces and have received an offer from the Greek government to open your factory near Athens.
C1) Identify and describe the main factor endowment described for Greece in the paragraph above.
Part D. Spicy Greeks mini-case continued:You continue to open new factories producing different lines of spices and sauces for sale all over the world. You recognize that each local or country market has some specific flavors-tastes that are local favorites in those markets and must be catered to in order to sell locally. (For example, Greece - Olive Oil, Feta Cheese) (India - Curries) (France - Mustards) (Japan -Wasabi, Soy) (US - Ketchup, Ranch). You also know that there are significant cost advantages to making and selling the same product all over the world. In many countries there are people who want only their local favorites but there are also many who want to try products from around the world.
D1) The Greeks are unclear about basic strategy. In fact, they labeled the 3 levels of strategy in a very simple way. You can help them by recalling the name of each level and the main decision or purpose of each level? (Don´t look it up...I want to know if you remember it...remember this is not graded).
Top Level:
Middle Level:
Lower Level: