It cannot also modify the product that it offers to the European market. The company will also have to deal with the high marketing expenses and will need to deal with the government authorities in keeping with their regulations on exporting.
2. Enter into an alliance with a large European company. Entering an alliance with a European company offers myriad of benefits for Dale. For one, this will enable the business organization to share risks and costs associated in entering the European market. Since, it will be dealing with an established firm which is already prominent in the target market, its entry will be much easier. Conforming to government regulation is also facilitated by the partnership. It should be noted that governments often favor local companies than foreign ones. Through the partnership, Dale will also benefit from the European company's knowledge and brand equity in the market together with the technology and other expertise of its partner. However, drawbacks can include mistrust in sharing proprietary technology and cultural clashes. Dale also has to deal with how to split the profit noting the asymmetric investments by the partners.
3. Manufacture the product in the United States and set up a wholly owned subsidiary in Europe. Manufacturing the product in the home country will enable Dale to reap economies of scale in production. Setting up a wholly owned subsidiary in Europe will allow the company to control marketing tactics and building brand image. It will also enable Dale to learn more about the market and tailor its product according. However, this will present concerns over government regulation and having to deal with a workforce with a different culture.
4. License a European firm to manufacture and market the phone in Europe. This will benefit Dale with a high return on investment as it will be given a high fee for the manufacture and marketing of the revolutionary wireless phone. No intervention in the foreign market is required as the licensee shoulders all the risk involved. The only downside is its inability to reap returns on manufacturing and marketing activities.
It is recommended that Dale chooses to partner with a large European firm in manufacturing and marketing its product abroad. This partnership will enable the company to enter the market easier while using the strong brand equity of the large firm. Sharing the risk with another entity is a potential way of mitigating risk. It should be noted that its partner's knowledge about the market will allow it to tailor its product according to unique needs of its target market.
1. How does expanding internationally benefit Wal-Mart In the international arena, Wal-Mart recognized that opportunities in the home country were becoming constrained. Wal-Mart is benefited from the international expansion through capturing a wider market base. It should be noted that as most developing economies improve their condition, opportunities abroad abound. The higher income in foreign markets represents profit prospects for retailers. The company also reaps economies of scale in purchasing and ordering due to its strategic partnership with merchandise suppliers. International expansion also enables it to employ its expertise and capabilities while banking on its strong brand equit