Business – 8.2 Marketing strategy – International marketing | e-Consult
8.2 Marketing strategy – International marketing (1 questions)
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Joint Venture (JV)
- Advantages
- Access to local partner’s market knowledge, distribution networks and relationships with regulators.
- Shared financial risk and lower initial capital outlay.
- Facilitates compliance with local ownership requirements that may be imposed by the host government.
- Disadvantages
- Potential for conflict over strategic direction, profit sharing and control of key assets.
- Risk of technology leakage or loss of proprietary processes to the partner.
- Decision‑making can be slower due to the need for consensus between partners.
Wholly Owned Subsidiary (WOS)
- Advantages
- Full control over operations, branding, and protection of intellectual property.
- Ability to implement the parent company’s standards, processes and strategic objectives without compromise.
- Potential for higher long‑term profitability once the market is established.
- Disadvantages
- Significant capital investment and exposure to political, economic and currency risks.
- Steeper learning curve regarding local market conditions, which may lead to costly mistakes.
- Possible regulatory barriers that restrict foreign ownership, requiring additional approvals.
For a UK manufacturer, the choice between a JV and a WOS will depend on factors such as the firm’s financial resources, the strategic importance of the market, the level of required control, and the regulatory environment of the host country.