Advantages And Disadvantages Of Franchisi In China

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Introduction: The purpose of this report is to critically analyze the different modes of market entry by evaluating the advantages and disadvantages of each in regards to the type of product, organizational and international factors. The report demonstrates how SM Jaleel Co. Ltd uses this analogy to enter China with its Fruta Brand in the most effective and profitable way. Company Background: SM Jaleel Co. Ltd (SMJ) is a manufacturer of non-alcoholic beverages which includes a wide variety drinks including fruit juices of in the English speaking Caribbean. SM Jaleel Co. is a MNE that has various subsidiaries and strategic alliances worldwide. Their main competitive advantage is their technological expertise in the production of their products.…show more content…
The Franchisee is given the right to manufacture and market the product while the Licensor provides the resources to do so. Advantages of Franchising Product Suitability: Fruta juices uses natural ingredients in its production thereby requiring local manufacturing in China. Allows easier communication of product benefits to the consumer. Organizational Suitability: SMJ has international experience in franchising and the resources to endure this method. Moderate control is allotted due to the higher amount of resources invested. Environmental characteristics of China: China is a leader in manufacturing and technology allowing cheaper raw materials and labor which is high in availability to be capitalized on. Foreign production would enable wider distribution to match growing demand. Franchising aids in bridging the gap between China and Trinidad’s culture as the franchisee have better understanding of local tastes. Disadvantages of Franchising Organizational…show more content…
Their successful partnership led to a world ranking of 5th largest mobile phone producer. They however faced difficulties when their products were not able to meet market changes incurring huge losses. Nevertheless, the venture did not dissolve but instead resulted in an acquisition of Ericsson by Sony. Vitro and Corning Glass’s Joint venture only lasted 25 months due to cultural differences which lead to difficulties in work practices and making decisions. Both companies were incompatible and the venture ended. Conclusion: A Joint Venture is surely a reasonable option for SM Jaleel due to the company’s scope of resources, international experience and franchising experience. The partnership will assist the company in penetrating the market, prevent government difficulties, gain knowledge about Chinese culture and new processes. WHOLLY OWNED FOREIGN ENTERPRISE (WOFE) Wholly Owned Foreign Enterprises (WOFE) are limited liability corporations that are entirely funded by one or more foreign entities. It involves the greatest amount risk, control and high investment than other methods of market

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