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INTERNATIONAL BUSINESS - Case Study #3: Going International

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Introduction

INTERNATIONAL BUSINESS Case Study #3: Going International Miriam Gonzalez Falcon EXECUTIVE SUMMARY MST is a small bio-defense company with an exceptional product that is patented in the U.S. They are looking for second round financing, a source of cash, in order to fulfill their goal of going public. At this time there is an unsolicited sales call from Japan, which would mean a great amount of money. This sale would mean hundreds, maybe even thousands of units. MST knows that their product is one of a kind now, but their competitors are working hardly to come up with a similar item. They need to make the deal quickly, before the Japanese buyer has other choices. There are several risks that must be considered while considering this deal. The most important one is that they might lose the technology due to either licensing or to reverse engineering, which will probably also mean the end of the company, knowing that it is not strong enough. It is also known that American patents can't be protected when exported to Japan, that is a big risk. There are a number of alternatives available to solve this problem. The first is for MST to export the product by itself, and sell it to the Japanese. ...read more.

Middle

However, due to the age and size of the company, getting an exporting license for a product such as this may prove to be difficult and time consuming. I assume that a bio-defense product might probably be a dual use product, adding to the difficulty of getting the exporting license. Another disadvantage that this choice may have is that since this is the first time MST has attempted to export anything, problems will arise, taking time to solve, meaning that the time to market will not be what they aim for. This is more important considering that the competition is already creating a similar product: if they take too long to export it, they might lose their market leader position. There are other less risks when considering loss of intellectual property and the product. The reverse engineering by the end user cannot be avoided, but if they buy lots of units, one can assume that they are not doing so just to reverse engineer them. The same happens with loss of intellectual property: there is no way for MST to guarantee that it won't happen, but a big enough sale means that they intend to use it rather than try and produce a knock off. The main problem with Japan is that American patents do not apply over there, so it the scenario that someone patents the product there is possible. ...read more.

Conclusion

The exporting license will be easier to get, with the Japanese's help, but not as easy as the previous option. Finally, the time to market depends on how much work the Japanese need to make to the plant before they can start producing, but it definitely will not be as bad as exporting by themselves. Recommendation Given an analysis of all the alternatives available, it is recommended to use the second one, because it addresses most of the needs of the strategic question in the best way, although it also has a few disadvantages as well. I have analyzed this alternative as the best because it takes a short period of time, helping MST to keep their position as market leader, as well as protecting its intellectual property due to the fact that trading companies have a reputation to maintain. Also, their experience in the field would be helpfull for MST, that is absolutely new in the business of exporting, both to close the sale and to obtain an exporting license that might prove to be difficult to get. The main disadvantage of this choice is that the amount of money obtained from the deal will not be as sizeable as they expected as far outweighed by all the risk that MST avoids by using a trading company. They must wait for longer before going public, to be sure of their possibilities. 1 ...read more.

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