Based on a company’s strategic mission, vision, and values, a firm will need to weigh the positive and negative aspects or the benefits and costs of entering a foreign market using one of several possible modes.
Scenario: You are the owner of a small U.S.-based clothing manufacturer. For the past five years, t-shirts from your brand have been produced and sold in Japan through a licensing agreement with Japanese firm KUME Co. through its Tokyo Tees subsidiary. The KUME Co. CEO recently visited you and revealed that her firm was about to acquire its leading rival in the Japanese market and, as a result, wants to sell its Tokyo Tees unit. The CEO had approached your firm with two proposals.
First, KUME Co. is willing to sell you its Tokyo Tees subsidiary outright. This would represent an acquisition for you in the Japanese market.
Second, if the two firms cannot agree on terms for a purchase of Tokyo Tees, KUME Co. is willing to sell its licensing agreement back to you, which will effectively allow you to formulate a new strategy for your company in Japan.
Based on your research from your Unit 7 Journal, your Assignment should address the following in an informative essay:
- Identify the costs and benefits with acquisition of the existing subsidiary and maintaining production in Japan.
- Compare the costs and benefits of a licensing repurchase and either establishment of a new production subsidiary in Japan through a Greenfield venture, exporting the American-produced t-shirts to Japan, franchising to another firm, or re-licensing to another firm.
- Explain your choice from the available options and your reasoning for your choice.
Respond in a minimum of a 350-word paper in an informative essay in APA format and citation style with a separate title and reference page.