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Business in a Foreign Country

If you were planning to conduct business in a foreign country, what type of business arrangement or business organization might you consider? Why?

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1. If you were planning to conduct business in a foreign country, what type of business arrangement or business organization might you consider? Why?

It depends on a number of factors, such as the type of product, the planned mode of entry, and so on. There are a variety of different business arrangements to consider, however, you might consider franchising. As accounts by legal experts reveal, firms that have developed and own a business format franchise use a variety of organizational forms to transfer this format to foreign markets (Mendelsohn 1992, Konigsburg 1991, Abell 1990). For example, in addition to selling franchises directly to host country individuals and businesses, franchising firms also confer on an independent intermediary the contractual responsibility to develop the local market by selling the franchise on or by operating their own outlets. Less commonly, owners of a franchise also take equity positions in foreign operations, in the form of company-owned outlets -- run by employee managers -- and as affiliated subsidiaries and joint ventures. These affiliated subsidiaries and joint ventures, as well as selling franchises to independent local entrepreneurs, can also be used to operate networks of internal, company-owned outlets in particular markets (Burton/Cross 1995) (http://www.accessmylibrary.com/coms2/summary_0286-6431697_ITM). Which one fits best with your ideas?

"Depending on the nature of the business being franchised, the downstream facilities developed by the franchisor take the form of shops, restaurants, offices, hotels, service outlets and so on. Here, we collectively refer to these host country facilities as units. It has long been recognized -- especially in the domestic setting -- that, in addition to franchising-out businesses to independent operators, franchising companies also operate a significant share of company owned units run by employee-managers. The decision whether or not to internalize the downstream activities of franchising firms has been well examined in the domestic context". (http://www.accessmylibrary.com/coms2/summary_0286-6431697_ITM).

Franchising is considered a business arrangement, but it is also referred to as a mode of ...

Solution Summary

If planning to conduct business in a foreign country, this solution discusses the type of business arrangement or business organization that a firm might consider, and why.

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