AB220 Unit 8 Assignment
Unit 8: Assignment
Sylvie George
Kaplan University
Abstract
1. Compare the advantages and disadvantages of acquiring the existing firm, and continuing production in Korea through acquisition for Zip-6.
2. Compare the advantages and disadvantages of re-purchasing the licensing agreement and either establishing Zip-6 subsidiary through Greenfield venture and producing in South Korea, exporting the product to Korea, franchising to another firm or relicensing to another firm.
3. State your choice of options to pursue and reasons for this choice.
Answers:
1. If you get it right, there can be many good reasons why buying an existing business could make good business sense. Remember though, that you will be taking on the legacy of the previous business owner, and you need to be aware of every aspect of the business you are about to buy.
Advantages are:
Some of the groundwork to get the business up and running will have been done.
It may be easier to obtain finance as the business will have a proven track record.
A business plan and marketing method should already be in place.
A market for the product or service will have already been demonstrated.
There are maybe established customers, a reliable income, a reputation to capitalize and build on and useful network of contacts.
Many of the problems will have been discovered and solved already.
Existing employees should have experience you can draw on.
Disadvantages are:
Zip-6 will often need to invest a large of amount up front, and will also have to budget for professional fees for solicitors, surveyors, accountants etc..
It will probably also need several months of working capital to assist with cash flow.
If the business has been neglected Zip-6 may need to invest quite a bit more on top of the purchase price to give it the best chance of success.
Ravi and Keith may need to honour or renegotiate any outstanding contracts the previous owner leaves in place.
They also need consider why the current owner is selling up
Sylvie George
Kaplan University
Abstract
1. Compare the advantages and disadvantages of acquiring the existing firm, and continuing production in Korea through acquisition for Zip-6.
2. Compare the advantages and disadvantages of re-purchasing the licensing agreement and either establishing Zip-6 subsidiary through Greenfield venture and producing in South Korea, exporting the product to Korea, franchising to another firm or relicensing to another firm.
3. State your choice of options to pursue and reasons for this choice.
Answers:
1. If you get it right, there can be many good reasons why buying an existing business could make good business sense. Remember though, that you will be taking on the legacy of the previous business owner, and you need to be aware of every aspect of the business you are about to buy.
Advantages are:
Some of the groundwork to get the business up and running will have been done.
It may be easier to obtain finance as the business will have a proven track record.
A business plan and marketing method should already be in place.
A market for the product or service will have already been demonstrated.
There are maybe established customers, a reliable income, a reputation to capitalize and build on and useful network of contacts.
Many of the problems will have been discovered and solved already.
Existing employees should have experience you can draw on.
Disadvantages are:
Zip-6 will often need to invest a large of amount up front, and will also have to budget for professional fees for solicitors, surveyors, accountants etc..
It will probably also need several months of working capital to assist with cash flow.
If the business has been neglected Zip-6 may need to invest quite a bit more on top of the purchase price to give it the best chance of success.
Ravi and Keith may need to honour or renegotiate any outstanding contracts the previous owner leaves in place.
They also need consider why the current owner is selling up
References: http://www.export.gov/foreign_market_entry_modes. https://www.business.qld.gov.au/business/.../business.../buying. Retrieved from: Global Business Today, 8th Edition (Charles W. L. Hill 2014). 2012 books.lardbucket.org/books/challenges-and-opportunities-in-international-business/s13-exporting-importing-and-global.html.