Question

Nataly's Flower Shop has long provided high quality, typical types of flowers to customers in the top 75 metropolitan areas in the us. Recently, Nataly's decided to franchise the business as its entry mode in Europe. Which scenario is most likely for Nataly's to suffer with this strategic action?

O European flowor shops will respond immediately to this new entry as they suffer from the liablity of foreigness
O European flower shops wil take no compessve response because of the lack of mutual interdependence among the fower shops.
O Eurogean fower shopt wi respond wheh feroe attacke because of resource distimalarfy between theon and Natay/s.
O European flower shops wal respond aggrestively becouse of market dependence and Nataly's liabilfy of foreigness

Answer 1

Nataly's Flower Shop is likely to encounter aggressive competition from European flower shops due to market dependence and liability of foreignness (option 1). This is typical in a monopolistic competitive market when a new player enters and existing firms respond to protect their market share.

Step-by-step explanation:

In examining the strategic action of Nataly's Flower Shop entering the European market through franchising, it's most likely that Nataly's will face aggressive responses from European flower shops due to market dependence and the liability of foreignness. This competitive landscape is influenced by monopolistic competitors and the dynamic of market entry, where existing competitors respond to protect their market share, as seen when an incumbent airline slashes prices to drive out new entrants.

The liability of foreignness refers to the disadvantages that foreign firms encounter in a new market, such as different consumer preferences, unfamiliar legal and economic environments, and nationalistic preferences by consumers for local firms. The market dependence of existing European flower shops makes them likely to protect their market share zealously against new entrants like Nataly's.