Case Study 1
Case Study 1
Case Study 1
What are the factors that a multinational firm should consider when deciding to
use a joint venture as a market entry strategy for a developing country? What
are the potential benefits and risks in taking this course of action?
Join ventures is one of the many market entry strategy for big foreign firms to
ally with a local company that has already been established in the market. With
both sides benefitting from the alliance created, foreign companies would see
entering the market smoothly and expanding into it ideal. (49)
assimilate in to the new market better and expanding without worrying about
cost. (271)
When China joined the World Trade Organization (WTO) as a member, it attracted
a large influx of foreign investment and used joint venture as a way to markets in
agreements discussed in writing. That way, it will ensure that should either
company retract their words or act unethically, there is a mutual
understanding of the consequences and repercussions of going back on
the terms and conditions set down initially. For example, citing from the
case of Danone vs Wahaha (Forbes, 2009), the partnership turned sour.
Danone was in charge of contributing capital, expertise and technology
while Wahaha produce and supply its trademark but Wahaha was found
illegally selling its products using distributors not listed in their joint
ventures. (120)
4. Establishing protocol for dissolving joint venture if it fails
It is good for companies to draw up a plan on how to dissolve the joint
venture when the time comes for both parties to go their own ways.
Shared assets such as infrastructure, technology, capital and machinery
will have to be discussed and written down as to how assets will have to
be divided. Without it, dissolving a joint venture will get ugly and may
result in lawsuits. (69)
Conclusion
The essay is to discuss the benefits and risks of using joint venture to
enter markets in developing countries and at the same time to suggest
agreeable marketing strategies for a joint venture between Danone and
the local food producer. With Danones experience on foreign investment
there should be no qualms on Danone finding success in the new market.
(59)
References:
Verbeke, A. (2013). International business strategy. Cambridge University
Press
Kwok, V. (2009). Danone Gives Up China Fight. [online] Forbes. Available
at: http://www.forbes.com/2009/09/30/danone-wahaha-dispute-marketsbusiness-trademark.html [Accessed 1 Sep. 2015].
Bennett, R. (1998). International marketing. London: Kogan Page.
Markman, G. and Phan, P. (2011). Competitive dynamics of
entrepreneurial market entry. Cheltenham, Glos, UK: Edward Elgar.