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A media company offers a majority of its movies through a specific distributor. The media company is beginning to produce content for a new foreign market to which the distributor has exclusive access.
A media company offers a majority of its movies through a specific distributor. The media company is beginning to produce content for a new foreign market to which the distributor has exclusive access.
To maximize savings and gain entry to this new market, the media company should:
A. create a contract for the new market.
B. enter into a partnership.
C. form a strategic alliance.
D. acquire the distributor.
Answer: C
Explanation:
To effectively enter a new foreign market and maximize savings while leveraging the distributor’s exclusive access, the steps are:
Assessment of Market Entry Strategies: The media company needs to evaluate various options like contracts, partnerships, strategic alliances, or acquisitions.
Strategic Alliance Formation: Forming a strategic alliance involves establishing a cooperative
agreement where both parties work together towards common goals, sharing resources, knowledge,
and access to markets.
Benefits of a Strategic Alliance:
Resource Sharing: Both companies can pool resources, including distribution networks, marketing, and technology, leading to cost savings and operational efficiencies.
Market Access: The distributor’s exclusive access to the new market provides a direct entry point for the media company’s content, reducing time and investment required for market penetration.
Risk Mitigation: Sharing the risks associated with entering a new market, such as cultural and regulatory challenges, makes the venture more manageable.
Enhanced Collaboration: Close collaboration allows for better alignment of strategies and quicker adaptation to market changes, enhancing competitive advantage.
Reference: Ireland, R. D., Hitt, M. A., & Vaidyanath, D. (2002). Alliance Management as a Source of Competitive Advantage. Journal of Management, 28(3), 413-446.
Varadarajan, R., & Cunningham, M. H. (1995). Strategic Alliances: A Synthesis of Conceptual Foundations. Journal of the Academy of Marketing Science, 23(4), 282-296.
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