Since World War II, the world has changed increasing the exchange of goods, people and capital around the world. This is called globalization. In order to be able to compete on a global scale, firms have developed different ways of entering international markets.
What are the main foreign entry methods and their advantages and disadvantages?
To develop these points, PepsiCo is a good example as it used to expand itself three strategies to tap new markets.
First of all, it made a Joint Venture, then proceeded to a company acquisition and finally made license agreement.
[...] (2000), Joint Venture in health care: an antitrust analysis, Chicago, American Bar Association, p.5 Ocean Spray www.oceanspray.com “Ocean Spray and PepsiCo form strategy alliance”, online, available from http://www.oceanspray.com/news/pr/pressrelease104.aspx, accessed on PepsiCo, www.pepsico.com, (2009), “Our History”, online, available from http://www.pepsico.com/Company/Our-History.html, accessed on Quick MBA, www.quickmba.com, (2007), “Foreign market entry modes”, online, available from http://www.quickmba.com/strategy/global/marketentry/, accessed on Spethmann B., Promo www.promomagazine.com, (2006), “Ocean Spray harvest crans in cities; piggybacks pepsi distribution”, online, available from http://promomagazine.com/eventmarketing/oceanspray_pepsi_101106/, accessed on Wilkof N.J. and Burkitt D. [...]
[...] On its website, Ocean Spray easily explains this agreement: “PepsiCo will market bottle and distribute single-serve cranberry juice products in the US and Canada under the Ocean Spray name”. The US and Canada markets are already well known by PepsiCo and are still receptive to new beverages. So this is a very low risky market. The advantages of licensing are the poor risks and investment, a speed entry to the market thanks to Ocean Spray's name or intangible property and the high return on investment. [...]
[...] In November of the same year, they bought the 20% left. According to entrepreneur.com, a company acquisition is “the purchase of one corporation by another, through either the purchase of its shares, or the purchase of its assets”. The goal of PepsiCo was to enter an unknown market: Ukraine. For that they needed to find a company that was already well implanted in the market. Sandora is a market leader in the high growth juice category. It produces half of the total juice volume consumed in Ukraine. [...]
[...] The risks of entering this market were quite high. PepsiCo had to face a changing of culture and be aware of the changing trends, the changing of legislation, the currency and rates fluctuation. The advantages of a company acquisition are mainly about the competitor. As Sandora was already known and used in Ukraine, they got less reaction from the competitor, they avoided barrier to entry, and had a high speed access to resources. But a company acquisition is also very expensive and can generate a fear from the employees if they are not informed of the changing of style and head of management. [...]
[...] What are the main foreign entry methods and their advantages and disadvantages? To develop these points, PepsiCo is a good example as it used to expand itself using three strategies to tap the new markets. First of all, it made a Joint Venture, then proceeded to a company acquisition and finally made license agreement. PepsiCo is a world leader in convenient snacks, foods and beverages with revenues of more than $43 billion. It counts over 198,000 employees. In 2003, PepsiCo made a Joint Venture with Unilever. [...]
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