Entry Mode
4. Entry Mode Screening:
Ultimately, the favored option for Krispy Kreme Doughnuts Inc. to penetrate into Singapore’s target market is the direct investment entry mode. Direct investment entails the firm undertaking the target product marketing task its self. This includes practices such as developing contracts, market research, target product marketing, handling legal issues and documentation and pricing. Direct investment, serves as an umbrella term for a number of entirely more specific examples of market entry, such as market investors, which also encompasses wholly owned subsidiaries.
Since Krispy Kreme Doughnuts is a franchise throughout the world there are only certain entry modes that would be possible. As a group we decided that there are two possible modes, which are direct investment through wholly owned subsidiaries or joint-venture. The entry modes were tested on the following six criteria:
Control
Initial Costs
Level of Risk
Profit Contribution
Reversibility
4a. Direct Investment: Wholly Owned Subsidiary:
Direct investment is when companies invest in foreign markets, and in Krispy Kreme’s case we want to penetrate local markets. Under direct investment, Krispy Kreme would choose to enter as a wholly owned subsidiary. A wholly owned subsidiary is when the parent company owns the company outright and there is no minority owners (Investopedia). Advantages to wholly-owned subsidiary are the significant amount of control and strong competitive advantage. Disadvantages include having a greater financial and management commitment because the owner is responsible for all the operations of the 14 company. Because the corporation is responsible for all the operations as well as the profits and losses the risk associated is very high, but so is the expected reward.
Control
Since Krispy Kreme would be coming into Singapore with a direct investment via wholly owned, Krispy Kreme would have control over all operations in Singapore. Krispy
Ultimately, the favored option for Krispy Kreme Doughnuts Inc. to penetrate into Singapore’s target market is the direct investment entry mode. Direct investment entails the firm undertaking the target product marketing task its self. This includes practices such as developing contracts, market research, target product marketing, handling legal issues and documentation and pricing. Direct investment, serves as an umbrella term for a number of entirely more specific examples of market entry, such as market investors, which also encompasses wholly owned subsidiaries.
Since Krispy Kreme Doughnuts is a franchise throughout the world there are only certain entry modes that would be possible. As a group we decided that there are two possible modes, which are direct investment through wholly owned subsidiaries or joint-venture. The entry modes were tested on the following six criteria:
Control
Initial Costs
Level of Risk
Profit Contribution
Reversibility
4a. Direct Investment: Wholly Owned Subsidiary:
Direct investment is when companies invest in foreign markets, and in Krispy Kreme’s case we want to penetrate local markets. Under direct investment, Krispy Kreme would choose to enter as a wholly owned subsidiary. A wholly owned subsidiary is when the parent company owns the company outright and there is no minority owners (Investopedia). Advantages to wholly-owned subsidiary are the significant amount of control and strong competitive advantage. Disadvantages include having a greater financial and management commitment because the owner is responsible for all the operations of the 14 company. Because the corporation is responsible for all the operations as well as the profits and losses the risk associated is very high, but so is the expected reward.
Control
Since Krispy Kreme would be coming into Singapore with a direct investment via wholly owned, Krispy Kreme would have control over all operations in Singapore. Krispy