15. Annual sales in 2008 were $23.5 billion, 60% of which were international. Source: Suzanne Kapner, „Making Dough,“ Fortune, August 17, 2009, 14. To decide whether an acquisition strategy should be pursued, companies review the legislation in the destination country. China, for example, has many restrictions on foreign ownership, but even a developed country like the United States has laws that deal with acquisitions. For example, you must be a U.S. citizen to own a TV channel in the United States. Similarly, a foreign company must own no more than 25 percent of a U.S. airline.13 Exporting is usually the easiest way to enter an international market, and that`s why most companies begin their international expansion with this entry model. Export is the sale of products and services abroad purchased in their country of origin. The advantage of this type of entry is that companies avoid the costs of setting up operations in the new country.
A strategic alliance involves a contractual agreement between two or more companies that states that the parties involved cooperate in some way to achieve a common goal for a certain period of time. In order to determine whether the alliance approach is appropriate for the company, the company must decide what value the partner could bring to the company, both materially and intangiblely. The advantages of partnering with a local company are that the local company probably understands the local culture, market and business opportunities better than an external company. Partners are especially valuable when they have a recognized and serious brand name in the country or have existing relationships with customers that the company might want to access. For example, Cisco has established a strategic alliance with Fujitsu to develop routers for Japan. In the alliance, Cisco decided to cobrander fujitsus to use fujitsus reputation in Japan for IT equipment and solutions, while maintaining the Cisco name, in order to take advantage of Cisco`s global reputation for switches and routers.7 Similarly, Xerox has launched signed strategic alliances to increase sales in emerging markets such as Central and Eastern Europe. India and Brazil.8 Thanks to twenty-first century information technologies, non-manufaceae functions can also be outsourced to countries with lower labour costs.. . . .