You are the international manager of a US business that has just invented a revo

Question

You are the international manager of a US business that has just invented 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 US, (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 suggest a course of action to your CEO.

Explanation / Answer

while you assess the venture into Western Europe, administration will consider three alternatives: FDI, licensing, and export.

EXPORT:-
On the off chance that you accept there are no exchange obstructions, the key contemplations would likely be transport expenses and confinement.

While transport expenses might be very low for a generally light and high esteem item like a PC, restriction can show a few troubles.

Power necessities, consoles, and inclinations in models all differ from nation to nation.

It might be hard to completely address these limitation issues from the US, yet not incomprehensible.

Setting Subsidiary:

FDI (setting up an entirely possessed backup) is unmistakably the most expensive and tedious methodology, yet the one that best ensures that basic learning won't be scattered and that confinement should be possible adequately. FDI will likewise put you in the business sector into which you need to offer and permit you to be close to the buyer.

LICENSING:

As there are numerous PC producers and wholesalers in Europe, there are prone to be various potential licensees. Be that as it may, by joining licensees, profitable mechanical data may must be uncovered, and the upper hand might be lost if the licensees utilize or spread this exclusive information.

It is dependably relies upon the assets that the organization is evaluating the choice of the setting up the development arrangement.

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