CHAPTER 3 GOING GLOBAL
Scenario
You're the owner of SolarPower, a company that manufactures solar kits that consist of a solar
panel, a rechargeable battery pack, and lanterns.This product has been enormously successful
in the United States with campers, hikers, backpackers, and outdoor adventurists, as well as
people who simply want to keep these kits in the event of an emergency or a disaster.So far,
youve only sold your solar kits in the U.S., but youre considering expanding into
underdeveloped areas of the world where electricity is less reliable.
Q1: International Market Analysis
Independent Agents
Independent agents are individuals or organizations that represent your business in
a foreign market. They sell your products and collect payment. This is a low-cost option
because agents work on commission, but it's also low control, because they represent
multiple firms and don't specialize in a particular product or market.
Licensing Arrangement
Under a licensing arrangement, you give a firm in the country where you want to do
business the right or resources to manufacture and market your products. Resources might
include your brand, patents, copyrights, technology, or operating procedures. In return, the
licensee pays you a fee plus royalties based on a percentage of sales.
Strategic Alliance
In a strategic alliance, each party invests resources and capital into a new business or the
parties cooperate in some mutually beneficial way, and the new business, owned by the
partners, divides its profits.
Foreign Direct Investment
Foreign direct investment (FDI) involves making a physical investment in buildings,
machinery, and equipment in another country.