Manufacture the product at home and let foreign sales agents handle the marketing.
business
Description
Details
of Task: Read the case “Starbucks: global brand in emerging markets and answer
the following questions:
Critically evaluate factors influencing Starbucks entry mode
choices.
·
Briefly
define concept of entry mode/entry mode choices.
· Highlight factors influencing entry mode
choices. You are expected to discuss the theoretical underpinning behind choice
of entry mode. Integrate empirical evidences where relevant.
·
600 words
·
Intensive
research of academic journal articles (at least 3) and company/industry/country
reports
·
Creative and
well supported arguments
·
Proper
referencing system
Sample was done by student for different
company
3.0 Mode
of Entry
Vitamax has
three options for its international venture as follows:
1. Manufacture the product at
home and let foreign sales agents handle the
marketing.
2.
Manufacture the product at home and set up a wholly
owned subsidiary in the US to handle
marketing.
3.
Enter into an alliance with an established Mexican
pharmaceutical firm where the product
would be manufactured in Mexico through a 50/50 joint venture and marketed
through its existing sales agents in the US.
This part will assess all three options’ advantages and disadvantages,
and also through factors influencing entry mode choices, namely internal,
external, transaction-related, and desired mode characteristics. Through the
assessment, the best mode of entry which is believed to deliver optimum
benefits for Vitamax will be chosen.
3.1Factors affecting mode of entry
3.1.1 Internal factors
Internal factors include firm size, international
experience, product complexity, and product
differentiation advantage. In terms of internal factors, Vitamax is a small
size company so its resources may be limited and it does not have international
experience as well, therefore making use of an
external partner’s expertise may prove advantageous. The product complexity and
product differentiation advantage is high since they are manufacturing a drug
that eradicates cancer cells. Therefore, internalization and intermediate mode
of entering a foreign market are encouraged, and in this case, option two or three.
