To properly decide the most appropriate path the firm should take to enter a foreign market we need to, first, look at the advantages and disadvantages of its options. There are many options from exporting to Licensing. However, the firm has settled on three different options: 1.) Exporting; Advantages – This choice allows the firm to avoid the large costs of setting up operations overseas. Exporting can lead to a successful experience curve as well as location economies. Disadvantages – Possible high costs of exporting that may prove to be unprofitable and uneconomical. The firm must trust a third party to hold its product and market it in such a way that it sells well. The firm could dislike the way that the third party is doing this. 2.) Setting up a Wholly Owned Subsidiary: Advantages – Reduces risk of losing control of technological competence. Gives the firm tight control of its operations overseas. This could also lead to a successful experience curve and/or location economies. Disadvantages – Most costly method of expanding to a foreign market. It is also a choice with risk. There are ways around the risk, however, there are problems that could occur with those workarounds as well. 3.) Joint Venture: Advantages – The firm can benefit from a foreign firm’s knowledge of their country. High costs and/or risks are shared between the two firms rather than falling completely on the home firm. Reduces the risk of political interference. Disadvantages – Risks of having unique technology and knowledge stolen. Control over any subsidiaries is significantly lessened and the firm may not achieve a successful experience curve and/or location economies. As with any collaboration a firm risks internal conflicts. Given all this information I believe that the best option would be to continue exporting. The unique technology used to create the new medical products would be at risk through a joint venture. A wholly owned subsidiary would be a significant cost and could still possibly fail due to risks. Exporting will have multiple expenses, however, new, improved medical supplies are always in demand. The weight-to-cost should be low enough to make exporting profitable. PLEASE HELP WITH THIS DISCUSSION POST

To properly decide the most appropriate path the firm should take to enter a foreign market we need to, first, look at the advantages and disadvantages of its options. There are many options from exporting to Licensing. However, the firm has settled on three different options: 1.) Exporting; Advantages – This choice allows the firm to avoid the large costs of setting up operations overseas. Exporting can lead to a successful experience curve as well as location economies. Disadvantages – Possible high costs of exporting that may prove to be unprofitable and uneconomical. The firm must trust a third party to hold its product and market it in such a way that it sells well. The firm could dislike the way that the third party is doing this. 2.) Setting up a Wholly Owned Subsidiary: Advantages – Reduces risk of losing control of technological competence. Gives the firm tight control of its operations overseas. This could also lead to a successful experience curve and/or location economies. Disadvantages – Most costly method of expanding to a foreign market. It is also a choice with risk. There are ways around the risk, however, there are problems that could occur with those workarounds as well. 3.) Joint Venture: Advantages – The firm can benefit from a foreign firm’s knowledge of their country. High costs and/or risks are shared between the two firms rather than falling completely on the home firm. Reduces the risk of political interference. Disadvantages – Risks of having unique technology and knowledge stolen. Control over any subsidiaries is significantly lessened and the firm may not achieve a successful experience curve and/or location economies. As with any collaboration a firm risks internal conflicts. Given all this information I believe that the best option would be to continue exporting. The unique technology used to create the new medical products would be at risk through a joint venture. A wholly owned subsidiary would be a significant cost and could still possibly fail due to risks. Exporting will have multiple expenses, however, new, improved medical supplies are always in demand. The weight-to-cost should be low enough to make exporting profitable. PLEASE HELP WITH THIS DISCUSSION POST

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1.) Exporting;

Advantages – This choice allows the firm to avoid the large costs of setting up operations overseas.

Exporting can lead to a successful experience curve as well as location economies.

Disadvantages – Possible high costs of exporting that may prove to be unprofitable and uneconomical.

The firm must trust a third party to hold its product and market it in such a way that it sells well. The firm could dislike the way that the third party is doing this.

2.) Setting up a Wholly Owned Subsidiary:

Advantages – Reduces risk of losing control of technological competence.

Gives the firm tight control of its operations overseas.
This could also lead to a successful experience curve and/or location economies.

Disadvantages – Most costly method of expanding to a foreign market. It is also a choice with risk. There are ways around the risk, however, there are problems that could occur with those workarounds as well.

3.) Joint Venture:

Advantages – The firm can benefit from a foreign firm’s knowledge of their country.

High costs and/or risks are shared between the two firms rather than falling completely on the home firm.
Reduces the risk of political interference.

Disadvantages – Risks of having unique technology and knowledge stolen.

Control over any subsidiaries is significantly lessened and the firm may not achieve a successful experience curve and/or location economies.
As with any collaboration a firm risks internal conflicts.

Given all this information I believe that the best option would be to continue exporting. The unique technology used to create the new medical products would be at risk through a joint venture. A wholly owned subsidiary would be a significant cost and could still possibly fail due to risks. Exporting will have multiple expenses, however, new, improved medical supplies are always in demand. The weight-to-cost should be low enough to make exporting profitable.

PLEASE HELP WITH THIS DISCUSSION POST

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