| Course | BU 231 Global Business Environment |
|---|---|
| Unit | Unit 5 |
| Paper type | Entry mode analysis |
| Length | About 1,170 words, 7 pages |
| Format | APA 7 student paper |
| School | Herzing University |
| Program | BS in Business Management |
| Updated | September 2026 |
Free sample paper for BU 231 Unit 5
Who Carries the License? An Entry Mode Analysis for Taking a Vermont Hand Balm Into Japan, With Five Criteria Set Before Four Modes Are Judged
Student Name
Business, Herzing University
BU 231: Global Business Environment
Instructor Name
March 17, 2026
Who Carries the License? An Entry Mode Analysis for Taking a Vermont Hand Balm Into Japan, With Five Criteria Set Before Four Modes Are Judged
Hollow Brook Botanicals, the composite balm and lotion company this course has followed since Unit 1, has established that Japan passes a first economic screen, that its Tokyo buyer's detailed questions largely reflect Japanese regulation, and that the balm faces no duty but a demanding chain of regulatory responsibility. The firm now has to decide how to enter. This paper sets five criteria before looking at any mode, judges exporting, licensing, a joint venture and a wholly owned subsidiary against the same five criteria, commits to one mode and states plainly what control the firm gives up by choosing it.
The Criteria, Set First
The criteria come from Hollow Brook's situation, not from a textbook list. The first is regulatory responsibility: who holds the marketing authorization license, files the brand notification and answers for each lot, since no product reaches a Japanese shelf without that company (Japan External Trade Organization [JETRO], 2011). The second is capital: the firm has about $11.2 million in annual sales and no outside investors, so any mode requiring large fixed investment competes with the Vermont factory for money. The third is control over the brand, meaning the formula, the label claims and the retail image, because the firm's reputation rests on a short ingredient list and plain claims. The fourth is speed to the first shelf, since a buyer is waiting now. The fifth is reversibility, the cost of changing course if Japan disappoints.
Anderson and Gatignon (1986) argued that entry modes differ chiefly in the control they give the entrant and the resources they commit, and that the right balance depends on how specific the firm's assets are and how uncertain the market is. Hollow Brook's key asset, its formula and brand, is highly specific, which argues for control. The market is uncertain for the firm, which argues for low commitment. These two pressures pull against each other, and the criteria are designed to show where they settle.
Mode One: Exporting Through a Licensed Importer
In this mode, a Japanese company that already holds a marketing authorization license buys the balm, carries the regulatory responsibility, applies the Japanese label in its licensed facility and sells to retailers. On regulatory responsibility, the mode scores well, because the burden sits with a company already equipped for it. Capital needs are low: Hollow Brook prepares ingredient documentation and lot records and adjusts packaging, but builds nothing in Japan. Speed is good, since an established importer can file notifications quickly. Reversibility is moderate; the firm can end the arrangement, but the brand notification sits with the importer and a new partner would have to file again.
Control is the weakness. The importer sets the resale price, chooses retailers and writes the Japanese label copy. Hill and Hult (2019) note that exporting through local agents trades control for speed and low cost, and that the foreign firm may later find its brand positioned in ways it would not have chosen.
Mode Two: Licensing a Japanese Manufacturer
Under licensing, a Japanese cosmetics maker would produce the balm to Hollow Brook's formula and sell it under the Hollow Brook name, paying a royalty. Capital needs are minimal, and the Japanese maker handles regulation as a domestic product. Speed is poor, however, because a new production line, local sourcing of beeswax and calendula, and stability testing all take time. Control is the weakest of the four modes: the formula leaves the firm's hands, and ingredient substitutions made for local sourcing could change the product. Reversibility is low, since a licensee that has learned to make the product can continue without the licensor once the agreement ends. For a firm whose entire value lies in its formula, licensing surrenders the thing it most needs to protect.
Mode Three: A Joint Venture With a Japanese Partner
A joint venture would create a new company in Japan, owned jointly with a Japanese distributor, holding its own license. It would give Hollow Brook more say over pricing and positioning than exporting and would share the capital cost. Kogut and Singh (1988) found that firms entering culturally distant markets were more likely to choose joint ventures, since a local partner supplies knowledge the entrant lacks. The difficulty is scale. A joint venture requires a licensed company with a responsible manager and quality systems, legal agreements and ongoing governance, all to sell a few thousand tins of balm in its first year. The mode is slow to set up, costly for both partners and difficult to unwind if either loses interest.
Mode Four: A Wholly Owned Subsidiary
A wholly owned subsidiary, formed as a stock company or a limited liability company under Japanese company law (Government of Japan, 2005), would hold its own marketing authorization license. It offers complete control over price, claims and retail choice. It also requires hiring qualified responsible managers, a licensed facility for labeling and storage, and quality and safety systems (JETRO, 2011), which the owners estimate would cost several hundred thousand dollars over two years before the first sale. Speed is the slowest of the four, and reversibility the worst, because closing a licensed Japanese company means ending employment, surrendering licenses and managing products already on shelves.
The Comparison and the Decision
The table summarizes the four modes on the five criteria, rated strong, moderate or weak for Hollow Brook's situation.
Hollow Brook should enter through exporting to a licensed importer. The mode is the only one that is strong on regulatory responsibility, capital and speed at the same time, and its weakness, control, can be partly repaired by contract. Johanson and Vahlne (1977) described internationalization as a process of learning in which firms increase commitment as they gain market knowledge. Exporting through an importer is the first step in that process: it produces knowledge about Japanese buyers, prices and regulators at low cost, and it leaves a subsidiary open as a later step if sales justify it.
| Criterion | Exporting via licensed importer | Licensing | Joint venture | Wholly owned subsidiary |
|---|---|---|---|---|
| Regulatory responsibility | Strong: importer holds license | Strong: local maker | Moderate: new license needed | Weak: firm builds it |
| Capital required | Strong: low | Strong: minimal | Weak: shared but large | Weak: highest |
| Control of brand and formula | Weak to moderate | Weak: formula leaves firm | Moderate | Strong |
| Speed to first shelf | Strong | Weak | Weak | Weak |
| Reversibility | Moderate | Weak | Weak | Weak |
The Control Hollow Brook Surrenders
Choosing an importer means giving up three kinds of control, and the firm should name them rather than pretend otherwise. It gives up control of the shelf price, which the importer and retailers will set. It gives up the direct relationship with Japanese regulators, since the importer holds the license and the brand notification. It gives up the first draft of its Japanese voice, because the importer will write the label and much of the marketing copy. The contract should recover what it can: a right to approve every label and claim before printing, a duty on the importer to cooperate with transferring the brand notification if the agreement ends, advance notice of any recall or regulatory contact, and an exclusivity limited to the Tokyo region for two years with sales targets attached. What the contract cannot recover is the knowledge the importer gains, which is the real price of entering this way.
References
Anderson, E., & Gatignon, H. (1986). Modes of foreign entry: A transaction cost analysis and propositions. Journal of International Business Studies, 17(3), 1-26. https://doi.org/10.1057/palgrave.jibs.8490432
Government of Japan. (2005). Companies Act (Act No. 86 of 2005, as amended). Japanese Law Translation. https://www.japaneselawtranslation.go.jp/en/laws/view/2035/en
Hill, C. W. L., & Hult, G. T. M. (2019). International business: Competing in the global marketplace (12th ed.). McGraw-Hill Education.
Japan External Trade Organization. (2011). Guidebook for export to Japan 2011: Cosmetics. https://www.jetro.go.jp/ext_images/mexico/mercadeo/1Ecosme.pdf
Johanson, J., & Vahlne, J.-E. (1977). The internationalization process of the firm: A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8(1), 23-32. https://doi.org/10.1057/palgrave.jibs.8490676
Kogut, B., & Singh, H. (1988). The effect of national culture on the choice of entry mode. Journal of International Business Studies, 19(3), 411-432. https://doi.org/10.1057/palgrave.jibs.8490394
What the BU 231 Unit 5 instructions ask for
The Unit 5 instructions ask you to compare the main ways a company can enter a foreign market and recommend one. Most versions list exporting, licensing or franchising, joint ventures and wholly owned subsidiaries, and they expect you to evaluate each against criteria such as cost, control, risk and speed. The recommendation should follow from the comparison and fit the firm's size and resources. Many instructors also want you to say what the chosen mode gives up. Scholarly sources on entry mode theory strengthen the paper, and a comparison table is welcome. Length is usually four to six pages in APA 7, and the analysis should carry forward the country and firm from earlier units.
Inside the BU 231 Unit 5 example
The sample states its five criteria before any mode is named, each drawn from the firm's facts: the Japanese license requirement, limited capital, a brand built on its formula, a waiting buyer and the need to exit cheaply. It then gives each of the four modes its own section, judged on the same five points. Licensing is rejected because the formula would leave the firm, the joint venture because its setup cost dwarfs first-year sales, and the subsidiary because licensed staff and facilities must come before any revenue. A table collects the ratings so the verdict can be checked. The final section lists what exporting surrenders, namely shelf price, regulator contact and the Japanese label voice, and the contract terms that recover part of it.
BU 231 Unit 5 rubric: what full points look like
The rubric for this unit tends to assess four areas: understanding of entry modes, quality of the evaluation criteria, strength of the recommendation and support from sources. Explaining each mode correctly earns the base points. Full points on criteria go to papers whose criteria come from the firm's situation rather than a generic list, and that apply the same criteria to every mode. The recommendation criterion rewards a clear choice that follows from the comparison and admits its costs; the sample's section on surrendered control is written for this. Instructors also credit theory used to explain a choice, not dropped in as decoration. A readable comparison table and correct APA format help with the organization and mechanics points.
BU 231 Unit 5 help: mistakes that cost points
The most frequent problem in Unit 5 is choosing a mode first and building criteria to justify it. Another is judging each mode on different factors, which makes the comparison meaningless. Students often treat a joint venture as the automatic safe choice without asking whether the firm can afford one. Many papers ignore what the chosen mode gives up, even though instructors look for that tradeoff. Some writers describe modes in textbook terms without connecting them to the country's rules; in the sample, the Japanese license requirement shapes every rating. Finally, avoid vague criteria such as better or more effective. Use terms a manager could measure or at least rank, like capital required, time to first sale and cost of exiting.
Get a BU 231 Unit 5 example written to your instructions
Send the Unit 5 instructions and your BU 231 rubric, together with the firm, product and market the assignment sets. We write a custom example that fixes the criteria and their weights first, assesses every mode on the same questions, tables the result, commits to one route and names what is surrendered. First custom sample free, back in 24 to 48 hours.
More BU 231 papers and business management samples
- BU 231 Unit 1: Global environment overview
- BU 231 Unit 2: Country analysis
- BU 231 Unit 3: Cultural analysis
- BU 231 Unit 4: Trade and regulation paper
- BU 231 Unit 6: Adaptation plan
- BU 231 Unit 7: Risk and mitigation paper
- BU 231 Unit 8: Market entry recommendation
- BU 106 Unit 5: Operations or supply paper
- BU 217 Unit 5: Stakeholder analysis
- BU 321 Unit 5: Hypothesis test write-up
- BU 380 Unit 5: Strategic option appraisal
BU 231 Unit 5 questions, answered
How many modes should the analysis compare?
Whatever the instructions name. Where that is left to you, three or four modes covering different levels of commitment work well: something at arm's length, something contractual, and something with the firm's own capital in the market. A fifth rarely earns credit and leaves the others thinly treated. What is graded is the evenness of the comparison, not the number of headings.
Is a joint venture always the safe middle option?
It is not, and papers treating it that way skip the analysis. A venture splits capital and risk but also splits control, and it introduces a partner whose interests differ from the firm's over time. Say what the partner contributes, what it receives, how disputes would be handled, and what the firm loses if the arrangement ends. Then the recommendation means something.
Do I need financial projections?
Check the instructions, since some sections want illustrative figures and many are satisfied with reasoning at this level. Where numbers are wanted, keep the arithmetic simple, write each assumption next to the figure it produces, and label the total an estimate. No outside analysis can forecast a market entry, and a confident projection undermines the argument resting on it.
Where can I find a free BU 231 Unit 5 sample paper?
The whole Unit 5 entry mode analysis is published above for free, with its comparison table and margin notes. If you need the same analysis for another firm or market, share your prompt and the desk will prepare a custom sample free of charge, typically in 24 to 48 hours.
Which entry mode theory should BU 231 Unit 5 cite?
Choose theory that explains your decision. The sample uses Anderson and Gatignon on control versus commitment, Kogut and Singh on cultural distance and Johanson and Vahlne on staged learning. One or two well-applied sources are better than a paragraph listing every theory from the textbook.