STARBUCKS Term Paper Example | Topics and Well Written Essays - 1500 words

STARBUCKS - Term Paper Example This will allow the licensor firm to collect a royalty fee from the licensee. This can be of great benefit to a licensor that has limited capital to enable it engage in full operations in the foreign nation. A major disadvantage though is the fact that this mode gives the firm much less tight and central control over the foreign operations. This entry mode is almost similar to licensing. The franchisee obtains the main business know-how through an agreement with the franchiser by paying a royalty fee. This know-how also includes patents and trademarks. The main difference when compared to licensing is that franchisee operates under certain rules dictated by the franchiser. This is mainly so as to maintain its reputation and standards. This is very common in the service industry. The main advantage with this is that the firm can efficiently explore this new market with minimal development costs and risks. The disadvantage is that the franchisee will have to abide by strict rules set by the franchiser. This is not always possible and the franchisor may have its reputation tarnished if the franchisee does not maintain the high standards. This is a very common entry mode that is used all over the globe. It can be explained by having two or more firms forming an alliance that will put them in a better position to penetrate the new international market. These are often based on a 50/50 type of agreement. This operation is always separate from both companies. There are situations whereby one of the firms invests more than the other leading to more shares in the Joint venture hence handing it a controlling stake. The advantages of this method of foreign market entry are;- This mode in simple terms means that the company owns all the shares in the overseas firm/entity. There are two main means of establishing such kinds of subsidiaries: Greenfield venture and