he choices that we have, in order to make an entry into Western European market, one can either consider exporting, licensing, acquisition, new wholly owned subsidiary, and strategic alliances. Exporting which means firms exporting goods are services to other country to be sold. It does not require the expense of establishing operations in the host countries, but exporters must establish some means of marketing and distributing their products. In so doing, exporting firms must develop contractual arrangements with host country. Its disadvantages include the often high costs of transportation and possible tariffs placed on incoming goods. In addition, the exporter has little or no control over the marketing and distribution of its products in the host country and must pay the distributor or allow the distributor to add to the price to recoup its cost and make a profit. As a result, it may be difficult to market a competitive product through exporting. Therefore, this method would not be suitable for ABC Electric strategic venture in Western Europe. A licensing arrangement allows ABC to purchase the right to manufacture and sell the firms product within the region. The ABC as licensee will takes the risks and makes the monetary investments in facilities for manufacturing, marketing, and distributing the goods or services. Licensing is possible the least costly form of global expansion. It is also a way to expand returns based on previous innovation. However, licensing carries with it various disadvantages. For example, this approach will provide ABC very little control over the manufacture and marketing of its goods in other country. Furthermore, licensing provide the least amount of profit because profit has to be share with the licenser and licensee. The global firm may learn the technology and after the license expires; they may steal the technology to produce a similar product to compete. So, ABC should not employ this ...
