Acquiring the existing firm Essay

Abstract1. Compargon the advantages and disadvantages of acquiring the actual firm, and continuing exertion in Korea through acquisition for Zip-6. 2. Compare the advantages and disadvantages of re-purchasing the licensing agreement and either establishing Zip-6 subsidiary through Greenfield venture and producing in South Korea, exporting the product to Korea, franchising to another firm or relicensing to another firm. 3. State your choice of options to pursue and reasons for this choice.Answers1. If you get it right, at that place give notice be many vertical reasons why buying an existing backing could make good business sense. Remember though, that you will be taking on the legacy of the previous business owner, and you direct to be aware of every aspect of the business you are about to buy. Advantages areSome of the bag to get the business up and running will have been done. It whitethorn be easier to obtain pay as the business will have a proven track record. A busine ss invent and marketing method should already be in place. A market for the product or function will have already been demonstrated. There are maybe established customers, a reliable income, a reputation to capitalize and build on and useful network of contacts. Many of the problems will have been observed and solved already. Existing employees should have experience you can draw on.Disadvantages areZip-6 will often carry to invest a large of amount up front, and will also have to budget for nonrecreational fees for solicitors, surveyors, accountants etc.. It will probably also need several months of working capital to assist with cash flow. If the business has been neglected Zip-6 may need to invest quite a bit more on assoil of the purchase price to give it the best chance ofsuccess. Ravi and Keith may need to honour or renegociate any outstanding contracts the previous owner leaves in place. They also need consider why the live owner is selling up and how this great power impact the business and they are (Zip-6) taking it over. It is possible certain staff may not be happy with a new boss, or the business might have been run badly and staff morale may be low.2. I will place licensing agreement in this case we are talking about an international licensing agreement which allow orthogonal firms, either exclusively or non -exclusively to manufacture a proprietors product for a contumacious term in a specific market. Licensing is a relatively flexible work agreement that can be customized to fit the needs and interests of both, licensor and licensee. Advantages of using an international licensing agreement are Is highly attractive for companies that are new in international business. Obtain extra income for technical know-how and servicesQuick expand without untold risk and large capital enthronisation. Reach new markets not accessible by export from existing facilities. Political risk is minimized as the licensee is usually one hundred percent loc ally owned. go along established markets closed by trade restrictions.Pave the way for future investments I the market.Disadvantages are humble income than in other entry modes.Risk of having the trademark and reputation ruined by an impotent quisling The foreign partner can also become a competitor by selling its production in places where the parental company is already in. Loss of control of the licensee manufacture and marketing trading operations and practices wind to loss of quality.Franchising agreement compare to licensing agreement tends to be longer and the franchisor offers a broader package of rights and resources which usually includes ,equipment, managerial systems, operation manual, initialtrainings, site approval and all the contribute necessary for the franchisee to run business in the same way it is done by the franchisor. Franchising is limited to trademarks and operating know-how of the business.Advantages of the international franchising areLow policy-maki ng riskLow costAllows simultaneous expansion into different regions of the world. Well selected partners bring financial investment as well as managerial capabilities to the operation.Disadvantages areFranchise may turn into competitors.Demand of franchisees may scare when starting to franchise a company, which can lead to making agreements with persecute candidates. A wrong franchisee may ruin the companys name and reputation in the market. Comparing to other modes such as exporting and even licensing, international franchising requires a greater financial investment to attract prospects and support and manage franchisees. The key success for franchising is to avoid sharing strategic activity with any franchisee. Especially for Zip-6 Co they do have a secret ingredients to their soft drink. Sharing those strategic activity may cast up the potential of the franchisee to be their future competitor due to the knowledge and strategic spill over.Greenfield investment is psychiatric hospital of a new wholly owned subsidiary, its often complex and potentially costly, but it is able to allow for full control to the firm and has the most potential to provide above average return. Greenfield is more apparent preferred where physical capital intensive plants are planned. It is high risk due to the costs of establishing a new business in new country Zip-6 may need to acquire knowledge and expertise of existing market by third parties, such consultant, competitors, or business partners. And also this entry dodging takes much time due to the need of stablishing new operations, distribution network, and the necessity to learn and implement captivate marketing strategies to compete with rivals in a new a market.3. My option will be science because its quick access and it offers thefastest, and largest, initial international expansion of any of the alternative. It is also a way to gain greater market power. It is lower risk than Greenfield investment because of the outcomes of an acquisition can be estimated more well and accurately. In overall, acquisition is attractive if there are well established firms already in operations or competitors want to enter the region. Of course there are many disadvantages and problems in achieving acquisition success. unless where there is risk there is also success.Referenceshttp//www.export.gov/foreign_market_entry_modes.https//www.business.qld.gov.au/business//business/buying. Retrieved from Global Business Today, 8th stochastic variable (Charles W. L. Hill 2014). 2012 books.lardbucket.org/books/challenges-and-opportunities-in-international-business/s13-exporting-importing-and-global.html.