S6: Entry Modes (2) Flashcards
Define greenfield investment in the context of entry modes.
Greenfield investment involves establishing a new operation in a foreign country, typically from the ground up.
What are the advantages of the organic entry strategy?
Advantages include full control, the ability to customize operations, and the potential for higher profits in the long term.
List some drawbacks of the organic entry strategy.
Drawbacks may include higher initial costs, longer time to establish, and potentially higher risk.
What are the advantages of the M&A (Mergers and Acquisitions) entry strategy?
Advantages include quick market entry, established customer base, and potential synergies between the merging companies.
What are some drawbacks of the M&A entry strategy?
Drawbacks may include cultural clashes, integration challenges, and the risk of overpayment for the acquired company.
What are the characteristics of global strategic partnerships?
Participants remain independent, share benefits and control, and make ongoing contributions in technology, products, and other strategic areas.
List the five attributes of global strategic partnerships.
Two or more companies develop a joint long-term strategy, the relationship is reciprocal, partners’ vision and efforts are global.
What does it mean for participants to make ongoing contributions in global strategic partnerships?
Participants continuously contribute in technology, products, and other strategic areas to enhance the alliance.
Differentiate between greenfield investment and acquisition in terms of entry modes.
Greenfield investment involves establishing a new operation, while acquisition involves purchasing an existing company.
What is the potential risk associated with M&A entry strategy?
The risk of overpayment for the acquired company.
Explain why global strategic partnerships are considered reciprocal.
Participants share benefits as well as control over the performance of assigned tasks.
Why might a company choose a greenfield investment over an acquisition?
A company might choose a greenfield investment for full control, customization, and potentially higher profits in the long term.
