Question

Our company is interested in producing and marketing a line of coffee that will penetrate the Chinese market. Your firm is willing to supply the equipment, products, product ingredients, trademark, and standardised operating system. What type of strategy are you going to use?

a. Barter trade

b. Wholly owned foreign affiliate

c. An export agreement

d. A franchise

e. A greenfield venture agreement

Answer 1

d. A franchise

Step-by-step explanation:

Franchise distribution is a business strategy in which an established brand is distributed to different owners who buy the right to produce and distribute the product on behalf of the franchise brand. Franchises are standardized, so each franchisee will use the same production process, same inputs, same marketing and even store decoration will be similar. As a strategy of penetration in new markets, the use of franchises is usually recommended, since it establishes the brand in various market points at a low cost, as each franchisee will bear the costs of its own store.