You are the international manager of a U.S. business that has just developed a r

Question

You are the international manager of a U.S. business that has just developed a revolutionary new personal computer that can perform the same functions as existing PCs but costs only half as much to manufacture. Several patents protect the unique design for this computer. Your CEO has asked you to formulate a recommendation for how to expand in Western Europe. Your options are:

to export from the United States

to license a European firm to manufacture and market the computer in Europe

to set up a wholly owned subsidiary in Europe

Evaluate the pros and cons of each alternative and suggest a course of action to your CEO

Explanation / Answer

Inorder to expand the business to Europe it is difficult to export them from US as they might be difficult to transport. As the product is protected by many patents giving it's license might not be a good idea but it will help us get a good company in Europe whose brand name might help the sales of our computer. Setting up a subsidiary is expensive but is a good idea once the business picks up the pace. Setting up a subsidiary is a good idea as it will also give us chance to set up our business in European countries.

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