1 CHAPTER 1 SCOPE OF THE STUDY 1.1 INTRODUCTION ...

exporter has less control over the marketing and distribution of its products in the hostcountry.• LicensingA licensing arrangement allows a foreign company to purchase the right to manufactureand sell a firm’s products within a host country or set of countries (Ireland, Hoskisson &Hitt, 2009:225). Marketing Teacher (2009) explains that licensing is whereby anorganisation charges a fee and/or royalty for the use of its technology, brand and/orexpertise. This entry mode is said to be one of the least expensive forms of internationalexpansion. Even if product life cycles are short, licensing may be a useful tool. Thedisadvantages include the reduced control it gives the firm over the distribution andmarketing of its products in other countries, as well as the possibility of the internationalfirm learning the technology and producing and selling a similar product after the licenceexpires (Ireland, Hoskisson & Hitt, 2009:225).Licensing is said to include franchising, which involves the organisation (franchisor)providing branding, concepts, expertise, and in-fact most facets that are needed tooperate in an overseas market, to the franchisee. Management tends to be controlledby the franchisor. Turnkey contracts and contract manufacturing is also said to beincluded in licensing (Marketing Teacher, 2009). Ward (2009) explains that a turnkeybusiness is a business that includes everything an organisation would need toimmediately start running the business. A business that is being sold as a turnkeybusiness would include tangibles such as inventory and equipment through tointangibles such as a previously established reputation and goodwill.• Strategic AlliancesMarketing Teacher (2009) defines a strategic alliance as “a term that describes a wholeseries of different relationships between companies that market internationally.Sometimes the relationships are between competitors”. Essentially strategic alliances68