Question

1.Omani Halwa Factories used two strategies to reach the global markets which are
a. Franchising
b. Joint Venture
Explain in detail?
2.based in question1, explain any four trade barriers you would face in the foreign country that you entering into?

Answer 1

1. a. Franchising is an expansionary business model where the franchisor (in this case - Omani Halwa Factories) licences the franchisee the use of its business model, intellectual property rights, its know-how and procedures, its brand the right to sell its goods and services. The franchisee pays some fee in return and agrees to follow the procedures and guidelines as laid out by the franchisor in the agreement.

Businesses do it when they are rapidly expanding and cannot supervise each of their stores by themselves.

b. A company while expanding enters into a joint venture specifically when it has no or very little knowledge of the culture and legal policies of the new countries. It then enters into a Joint Venture with a local company in that country to get their expertise on the culture, consumer behaviour and legal policies. Often the company that's expanding share its capital and technology and the domestic company its local expertise.

2. The trade barriers that a company might come across while entering a foreign country are:

i) Tariff Barriers - Countries with strong protectionist policies generally impose heavy tariffs on their imports so that the development of their local industries is not hampered and so that their money remains within the nation.

ii) Non-tariff Barriers - Voluminous and complicated requirements of documents and excessive delays in customs clearance due to human and technical factors give birth to non-tariff barriers.

iii) Cultural Barriers - Consumer behaviour varies with culture. The way the product would be used or the frequency with which your product would be used - you may not know about these variables upon entering a new country with a very different culture than your own.

iv) Local Competition - The local competitors would definitely know more about their own culture than a foreign company entering into their countries and thus they probably know their customers better. They also generally have a strong foothold in the market.

THANK YOU!

Please give this answer a thumbs up, if this helped you even slightly. :)