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Business Expansion Methodologies

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 of this computer. Your CEO has asked you to formulate a recommendation for how to expand into Western Europe. Your options are (a) to export from the United States, (b) to license a European firm to manufacture and market the computer in Europe, and (c) to set up a wholly owned subsidiary in Europe. Evaluate the pros and cons of each alternative and choose one. Suggest a course of action to your CEO. Explain the reasons for your choice in detail.

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In a situation of this nature, I would suggest to the CEO that setting up a wholly owned subsidiary in Europe would be the most advantageous course of action. This is due to the fact that a wholly owned subsidiary located in Europe, would be able to produce these computers very close to the Western European market, which will make these computers available to consumers in a much more expeditious manner. In addition, a wholly owned subsidiary in Europe would eliminate the costs that are incurred with shipping the computers from the United States to ...

Solution Summary

This solution describes key components of business expansion variables.