Comparative Analysis: Entry Modes for Global Market Expansion

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Added on 2021/02/22

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This report examines various entry modes for businesses seeking to expand into global markets. It explores collaboration, joint ventures, and licensing as strategies for minimizing risk and investment while navigating international business landscapes. The report analyzes the case studies of SHAPE's collaborations with Sheffield Hallam University, the joint venture between Sony and Ericsson, and Sanrio's licensing agreements. It highlights the benefits and limitations of each entry mode, providing insights into how companies can leverage these strategies to achieve market penetration and increase profitability. The report also includes a comparison of the advantages and disadvantages of each approach, alongside a discussion of the unsuccessful joint venture between Danone and Wahaha. Overall, the report provides a comprehensive overview of entry modes, offering valuable information for businesses looking to expand their global presence and successfully navigate the complexities of international markets.

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Table of Content
1. Introduction ......................................................................................................................... 3
2. Objective ............................................................................................................................. 3
3.1Mode of Entry ................................................................................................................ 3
2.1.1 Collaboration............................................................................................... 3
2.1.2 Joint Venture ............................................................................................... 4
2.1.3 Licensing ..................................................................................................... 4
3. Strategy ............................................................................................................................... 4
3.1Collaboration.................................................................................................................. 4
3.1.1 The case study of using the Collaboration. ........................................................ 4
3.1.2 The benefit of working collaboration between SHAPE and Sheffield Hallam
University.................................................................................................................... 5
3.2 Joint Venture ................................................................................................................. 6
3.2.1 The case study of joint venture for Sony Ericsson ............................................ 6
3.2.2 The benefit of working joint venture between Sony and Ericsson .................... 7
3.3 Licensing ........................................................................................................................ 7
3.3.1 The case study of licensing ................................................................................ 7
3.3.2 The benefit of Sanrio work as licensing with other companies ......................... 8
4. Limitation ............................................................................................................................ 8
4.1 The unsuccessful case for joint venture between Danone and Wahaha ...................... 8
4.2 The comparison on benefits and risk of “Collaboration”, “Joint Venture” and
“Licensing” .......................................................................................................................... 9
5. Conclusions ......................................................................................................................... 9
6. References ......................................................................................................................... 10

1. Introduction
For reach the customers in global market, most of the companies started to enter foreign
markets to explore their business. Base on the company’s business nature, company’s size
and the investment package, these all the factors to affect the decision of choosing the strategy
as there are many ways to help your business to go into global, also there is not only one
single way to fit for the company’s nature to explore their business into global market.
Therefore, choosing the right entry mode is the critical factor when start to explore the
business into global market (Saylordotorg, 2020)
In this paper, analysis some of the companies to use different entry modes to reduce the risk
under the minimize investment and political influence when they decide to corporate with
difference national companies.
2. Objective
3.1Mode of Entry
Entry modes are one of the easy and faster strategy to getting the business and products into
foreign market in worldwide. There are difference strategies of entry mode that companies can
choose for foreign market entry, such as export mode, joint venturing, collaboration, and
licensing. Exporting is the simplest way for market entry and it is allows company to maintain
the existing business and the production while entry into the foreign market for distribution.
Compared with other strategies, exporting is the most basic strategy to go into the foreign
market with low implementation cost and reduce risk for business owner. (Saylordotorg, 2020)
2.1.1 Collaboration
Collaboration is the cooperative export mode for the small and medium company to
explore the business or develop new products or services and upgrading the business
size. Two difference nature companies can be connected as collaboration and share the
resources, knowledge, investment and technology to each other’s. Collaboration is aim
to improve the traditional business and gain the largest benefit with the limit
investment in the global market. Due to share the experience and the technology with
other company, it will reduce the chance for failure to explore new business or services.
Also, collaboration can easier to create new ideas and improve the business and giving
a new way to the companies. (Gregory, 2019; Idox, 2019)

2.1.2 Joint Venture
Joint venture is an intermediate entry mode which involves a contract with or shared
the ownership, control and risk. It is a commercial agreement between two or more
different companies to co-operate a new particular business. Joint venture can cover a
large range of co-operation business arrangements which include difference degrees of
integration. When companies want to explore or develop new business or servers, the
easy way is looking for the greater partner who has more expertise, resources, technical
and financial. Joint venture may be easier to see the involved potential benefit but it
is also easier to failure without clear strategy plan, misunderstand the aim of subjects
or hard to make the commitment in the projects.
(Ilari and Grange, 1999; UKEssays, 2017; Tony Robbins, 2020; WallStreetMojo, 2020)
2.1.3 Licensing
Licensing is a legal agreement or contract between two parties, it is a relatively
sophisticated arrangement to grant the right of the products or services with some
specific policy to another companies to use. Licensing is a particularly useful strategy
when the purchaser of the license has a large market share in the market that the
company wants to entry. The licensee can keep the benefit that earned by the use of the
licensed items. As a return, the licensor can receive part of the profits for the products
sale which are royalty out of their items.
(Irwin, 2012; Corporate Finance Institute, 2017)
3. Strategy
3.1Collaboration
3.1.1 The case study of using the Collaboration.
SHAPE – the School for Higher and Professional Education (SHAPE) (SHAPE, 2020) was
established in 2013. SHAPE aim to teach the new knowledge and skill to the people who
working in industry. As SHAPE is the important role for providing the international skillful
program, they started to work as collaboration with some local and international universities,
such as United Kingdom, United States, Australia and Tai Wan.
Sheffield Hallam University is the oversea universities in United Kingdom that work
collaboration with SHAPE. It is the famous universities in United Kingdom. They got many
experience to develop the degree programs for international students over 150 countries.

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For the collaboration relationship between Sheffield Hallam and SHAPE in those programs,
SHAPE is the course program developer in Hong Kong, they provide the onsite and
administrative support, such as arrange the classroom, marketing promotion, financial local
support and the organization for the course programs. Due to the Education Bureau’s guild
line, the new course programs which collaboration with Sheffield Hallam University should be
register under Education Bureau. So, the entire course should be located in Hong Kong’s
campus or center and it will be more convenience for the admission to students. As the target
are the Hong Kong local students, so that for the Financial part, SHAPE need to take the
responsibility to collect the fee of admission and reflect the income or profit to Sheffield
Hallam University. (SHAPE, 2020; Sheffield Hallam University, 2020)
The role of the Sheffield Hallam University is the controller of the quality for the graduates
who can achieve the industrial standard. Sheffield Hallam University provided the course
tutors, teaching pan and the materials and also make sure that the education levels of the
program were achieved the international standard.
3.1.2 The benefit of working collaboration between SHAPE and Sheffield Hallam University
Two different education school work as collaboration is the best way to increasing the student
admission and the profit. Due to share the cost and the risk for develop the new programs,
both of two education school, both of two them can explore the program in stable. Refer to the
financial statement for SHAPE from the Council (See the fig. 1), it shown that the income are
increasing in every year that’s mean collaboration programs are running successfully in Hong
Kong. (Idox, 2019; SHAPE, 2020; Sheffield Hallam University, 2020)

Figure 1 the note to the financial statement from Council
3.2 Joint Venture
3.2.1 The case study of joint venture for Sony Ericsson
Ericsson found that the products sales was dropped around 52% and foresee that they were
losing the market share when facing the biggest competitors Nokia and Motorola. At the same
time, Sony predicted the opportunities in mobile phone industry and foresaw multi-media was
the trend in future. Due to Ericsson and Sony predicted the weakness on their company, so that
was the chance to work as joint venture and explored or developed the new products and
increased the marketing share. (UKEssays, 1970; StudyMoose, 2017)
In 2001, Ericsson and Sony decided to work with joint venture and create a new company
which named Sony Ericsson. Sony Ericsson aims to inspired people to communication more
and encouraged people to created and enjoy in the entertainment experiences. Sony and
Ericsson decided to work with joint venture as they wanted to combine the consumer’s
electronics expertise from Sony with the technology knowledge from Ericsson’s. (Uggla and
Verick, 2008; StudyMoose, 2017)

3.2.2 The benefit of working joint venture between Sony and Ericsson
Sony Ericsson is now one of the famous and trusted mobile multi-media providers in the
world. Also, Sony Ericson builds up the positive brand image as the advanced technology
phone with top-level applications to cell phone, music devise and imaging. Joint venture help
to explore their market share and enhance Sony Ericsson to the top brand in communication
entertainment. (Choi, 2011; Uggla and Verick, 2008; UKEssays, 2017; Tony Robbins, 2020)
(Source: Google)
3.3 Licensing
3.3.1 The case study of licensing
Hello Kitty is the famous and iconic cartoon cat who designed by Sanrio Co. in 1974. Sanrio
is one of the local brands in Japan. Sanrio used the characters that designed by themselves and
merchant the coin purses, stationary and accessory for girl’s customers. Due to Hello Kitty
became more popular and got huge fans, Sanrio decided to explore their business to global by
using the reputation of Hello Kitty. (Belson and Bremner, 2005; nippon, 2014)
Sanrio granted the licensing and work with different companies, such as Sephora, Uniqlo,
H&M and Forever 21 in US. They granted the licensing for developing new product in
fast-fashion. The main duty of Sanrio was provide the foundation and other companies who
got the licensing permit were handle the design and marketing plan. In 2015, an exhibition of
“Hello! Exploring the Super cute World of Hello Kitty” was held at Japanese American
National Museum in Los Angeles and attracts more than 20,000 Hello Kitty’s fans to
attendance. (Nippon, 2014)

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3.3.2 The benefit of Sanrio work as licensing with other companies
Sanrio used licensing selling to explore their products to global and increasing their characters’
reputation. Sanrio authorized the licensing and used by the authorization company’s resources
to develop new products. It is the easy way to entry international market, reduce the
investment risk and increasing the profit at the same time.
(Irwin, 2012: Nippon, 2014; Corporate Finance Institute, 2017)
4. Limitation
4.1 The unsuccessful case for joint venture between Danone and Wahaha
In 1996, a china local brand – Wahaha decided to joint venture with a French company –
Danone and aims to develop many China’s top drinks brands. Their partnerships were being
good at the first time. But base on the culture issues, Danone and Wahaha went into a legal
depute in 2007. Danone complained Wahaha that they stated another business parallel without
their joint venture relationship, also wahaha sell the competed brand products illegally. Due to
criminal charge and the litigation on trading issues, their legal battle involved in the United
States, China, British Virgin Islands and Sweden. At the end, they finished the relationship of
joint venture after a ling year dispute. (CNBC, 2008; Forbes, 2009)
In this case, it showed that it is difficult to keep the good relationship to work as joint venture
even both of the companies had signed the agreement clearly between two different national
countries.

4.2 The comparison on benefits and risk of “Collaboration”, “Joint Venture” and
“Licensing”
5. Conclusions
In conclusion, entry modes are one of the easy and faster strategy to getting the business
and products into foreign market in worldwide. Companies can base on their business
size, resources, technology and investment to choose the right entry mode to go into
global. “Collaboration”, “Joint Venture” and “Licensing” can help the company go into
the global with minimize the investment, reduce the risk and prevent the political
problem. These three of the entry modes focus on share the cost, risk and resources with
each other’s, so the new business or products will running in stable and mature during the
agreement. But there is some disadvantage for these three types of entry modes, when the
business went into some problem or issues; it is hard to make the final solution or
decision by two parties. Also, two parties will share the profit when the business going to
be more reputation and popular and that is not easier to calculating fairly for the
percentage of the return profit. Even though there are some disadvantage for using entry
mode to run the business with partnership, “Collaboration”, “Joint Venture” and
“Licensing” still are the common ways to help the company to explore their market share
and go into global. And most of the international companies used to these three types of
entry modes to successfully enhance their business size and increasing their profit.

6. References
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4. Choi, C., 2011. The Effect of Joint Venture Partners' Management Control
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