INTB 3354 - Introduction to Global Business Hello I need help with the following

Question

INTB 3354 - Introduction to Global Business

Hello I need help with the following question.

Nonequity Modes of Market Entry Companies must determine which mode ar modes to use when entering fareign markets, which can be either nonequity or equity. If a company wishes to enter into international markels, there is an array of nonequity entry mode alternatives available to select from. This exercise examines the range of nonequity options available to companies, whether smaller companies that previously had only domestic experience or larger companies that might have extensive international experience Drag each characteristic listed on the left to the nonequity entry mode that it is most correctly associated with. Nonequity Entry Mode General Characteristics ant right toa use expertisc Exporting Work with local producer Turnkey projects Build and transfer Licensing Know-how for a fee Franchising Grant right to brand name Management contract Handle own exports ontract manufacturing

Explanation / Answer

We can match the characteristics with the non equity modes as given below.

Exporting- handle own exports

Turnkey project- build and transfer

Licensing – Grant right to use expertise

Franchising- grab right to brand name

Management contract - know-how for a fee

Contract manufacturing- work with local producer

Explanation:

Exporting is the mode of entry into foreign market where the company would export their goods produced in one country to another country and hence the correct characteristic for exporting would be ‘handle own exports’. Turnkey projects are the contract under which a firm agrees to fully design, build and equip a business and transfer the project to the purchaser for remuneration. Hence the characteristic for Turnkey project can be identified as build and transfer. Licensing is the mode of international entry in which the firm grants the right to use its intellectual properties for a specified period and receive payment in the form of royalty fee. As the firm grants the permission to use its expertise to another firm, Licensing can be matched with ‘grant right to use expertise’. Franchising is the method in which one party grants the permission to use its brand name, ideas and processes to another party. Hence franchising can be matched with ‘grab right to brand name’. Management contract is the agreement where the company outsources some of its management activities and utilizes the expertise of the hired management team for the business activities paying a fee. Hence management contract can be matched to ‘know-how for a fee’. Contract manufacturing allows the firms to contract with another firm for certain production activities and contracting with the local producer comes under contract manufacturing.

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