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INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES (continued)

LEARNING OBJECTIV ES

1. To identify the aspects and importance of international entrepreneurship.
2. To identify the important strategic issues in international entrepreneurship.
3. To identify the available options for entering international markets.
4. To present the problems and barriers to international entrepreneurship.

DIRECT FOREIGN INVESTME NT

Majority interest Another equity method is to purchase a majority interest in a foreign business. The majority interest allows the entrepreneur to obtain managerial control while maintaining the company’s local identity. In technical sense anything over 50% of the equity of the firm is majority interest

100 percent ownership
One hundred percent ownership assures control. One form of 100 percent ownership is mergers and acquisitions, but the entrepreneur needs to have a general understanding of the benefits and problems of mergers as a strategic option. A horizontal merger is the combination of two firms that produce closely related projects in the same area. A vertical merger is the combination of firms in successive stages of production. A product extension merger occurs when acquiring and acquired companies have related production but do not have directly competing products. A market extension merger is when two firms produce the same products but sell them in different areas. A diversified activity merger is a conglomerate merger involving the consolidation of two unrelated firms. Mergers are a sound strategic option for an entrepreneur when synergy is present. Economies of scale are the most common reason for mergers. A second factor that causes synergy is taxation, or unused tax credits. The final factor is the benefits received in combining complementary resources.

Read more: MGT602 - Entrepreneurship - Lecture Handout 13

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Poka-Yoke (Mistake-Proofing)

Poka-yoke is a QA technique developed by Shingo at Toyota in 1960’s. Poka-yoke devices are mechanisms that lead to prevention of potential quality problem before it occurs or the rapid detection of quality problems if they are introduced.

• Examples:
  • Light on if the car door is not properly closed
  • Warning beep if the engine is turned-off when lights are on
  
  

  Read more: CS605 - Software Engineering II - Lecture Handout 32