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.

View Answer

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.