Global Business Case Study

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Choi Yei Eun (Jade) Ms. Anita Paul BMO1102 3 April 2015 The idea of global business started fairly long time ago. When one speaks of Global Business, the simple term would be the buying and selling of goods and services by people from other countries. Goods can be manufactured in another country but can be purchased elsewhere. In this way, products are easily available for the consumer. All the necessary taxes or duties have been included in the price making it a straightforward transaction. On the other hand, there is more than sending goods to another country to sell, in order for this to take place without problems, companies have trade rules and trade agreements to follow (Williams McWilliams Management, 2010, p.127). The main factors …show more content…

Licensing and franchising are the important and well-known contracts. When it comes to licensing, an agreement is made whereby a domestic company receives royalty payment for producing; its product, selling its service or uses its brand name. On the other hand, franchise is more of a network of firms in which the manufacturer or marketer of a product or service, the franchisor licenses the entire businesses to another person or company. It was stated that, ‘Therefore, when considering international expansion, a foreign firm may regard other foreign investors in the same industry that are already established in the host country as a cognitively relevant identity group and assess the extent to which they have managed to gain legitimacy in the host market under consideration (Fligstein, 1985; Henisz & Delios, 2001, p.178). As mentioned above, the easiest and fastest way for a global expansion is to have a local partner for designated country and simply give the rights to control over. However the risks that licensing and franchising faces are that licenses may become the future competitors because the tactics, skills, knowledge and experiences are exposed. Additionally, lack of control over the qualities and quantities of the product may give great impact to the parent company. As franchising gives a full control, name and color of the company, if there are bad performances it will cause image damage to the

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