International Business Law Coursework

05/18/2018

Homework assignment 1

Jiayu Chen

FI 890

section 101

1. Felix, a U.S. technology company has recently developed a revolutionary wireless phone.

The product offers exciting new features along with all of the features of current products,

but at a fraction of the manufacturing costs. As the

international business manager of Felix,

you have been asked to choose the best mode of entry into the European market. Your

have the following options:

oExport your product from the United States.

oEnter into an alliance with a large European company.

oManufacture the product in the United States and set up a wholly owned

subsidiary in Europe.

oLicense a European firm to manufacture and market the phone in Europe.

In preparation for your choice, list the pros and cons of each method of entry. Which choice

do you present to your Chief Executive Officer (CEO)? Please do not forget to include any

legal issues arising from each method of entry. Support your decision.

1).Export the product from United State:

Pros: Compared to the other forms of international business, exporting is relatively uncomplicated. It usually requires only a modest capital investment. The risks are generally manageable in most occasions. At the same time, it has no extra costs for setting up new

Cons:It would have less market information about other European markets for direct export.  And it would cause a barriers problems.

Enter into an alliance with a large European company:

Pros: Since European company knows the European market well, it can easily attract more customers. Less complexities in terms of investing time and resources on understanding laws and regulations. It also can diversify the costs of entering the market. At the same time , it is convenient to get complementary resources and skilled domestic employees 

Cons: The whole process requires a long time. On the other hand, it is sometimes hard to get a clear and fair contract with companies between different countries.

2).Manufacture the product in the United States and set up a wholly owned subsidiary in Europe.

Pros: It would have a higher return because the cost is reduced. At the same time, it has less managerial and operation problems so that company can spend more time focusing the products quality of service spite of legalities.

Con：I may cause compliance to other country's laws which related to labours and wages.  Establishing recognition in foreign market and cultural differences also would be problems.

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