1. 1.03B Principles of Business

2. Essential Question  Which is the appropriate entry mode for businesses to enter the global marketplace?

3. Entry Modes For Businesses To Enter The Global Marketplace  Varies by intent of involvement with daily operations and expected monetary rewards.  The main entry modes are:  Franchising  Licensing  Joint venture

4. Main Entry Modes to the Global Marketplace  Franchising is allowing a business the rights to use another company’s name or process in a specific way.  What are some examples?  H & R Block  Dunkin’ Donuts  Licensing is selling the right to a company to use some intangible property (production process, trademark, or brand name) for a fee or royalty.  What are some examples?  Dick Idol furniture/products  Beyond Juice Cafés 4

5. Main Entry Modes to the Global Marketplace continued  Joint venture happens when two or more companies agree to share a business project.  What are some examples?  Cable company and television stations  Oil lube and tire service company 5

6. Franchise  Advantages.  You purchase an entire concept; Turn- key.  You can call on corporate for support.  Disadvantages.  Franchises can be very expensive to start.  The franchisee must give the franchiser a percentage of each months sales as a royalty.

7. Licensing  Advantages  About 90 percent of the $160 million a year in sales at Calvin Klein Inc. comes from licensing the designer's name to makers of underwear, jeans and perfume  Instantly tap the existing production, distribution and marketing systems that other companies may have spent decades building

8. Licensing  Disadvantages  settle for a smaller piece of the pie  Calvin Klein-branded products, for example, generate $5 billion in sales a year, the vast majority of which goes to licensees and retailers

9. Joint Venture  Advantages  a risk reducing mechanism in new-market penetration  pooling of resource for large projects  Disadvantages  problems in equity ownership  operational control  distribution of profits (or losses)  two out of five JV arrangements last less than four years  dissolved in acrimony