Imagine that after 100+ years on Spring Garden, Yum Yum finally decides to expand its operations and sell its hotdogs in China.

Yum Yum is weighing different options, from opening up a fully-owned Yum Yum restaurant chain, to working with existing restaurants owned by Chinese partners, to simply selling the hotdogs through local food stores, restaurants and other third-party vendors.

You are hired as a pro-bono adviser to help develop an internalization strategy for Yum Yum - and you gladly accept the offer as you have just completed MGT-301 and you feel you can help.

1. Why would Yum Yum want to open a subsidiary overseas? List 3 reasons.

2. (5%) Evaluate Yum Yum's position with respect to its Chinese market entry:

Experience: How much experience does Yum Yum have with respect to doing business in China?

Resource commitment: How many resources can Yum Yum commit to the idea of expanding its business into China? Flexibility: How important would it be for Yum Yum to be able to withdraw from China if something goes wrong (e.g., layoff employees in China, close up restaurants, etc.)?

Risk: How much risk can Yum Yum tolerate with respect to its new venture in China?

Control: How much control does Yum Yum need over the process of making/distributing its hot dogs to ensure that the final product has the famous unnaturally red color?

3. What would be the optimal entry mode and why? Make sure to use the right terminology (i.e., Licensing, franchising, etc.). Choose one entry that you feel is optimal in this case and provide a brief one-paragraph justification for your choice.

4. If Yum Yum wanted to focus on its product and hire external help to manage initial networking, find local partners, ensure safe and quick transportation of its product and related materials to China, what would be Yum Yum's options?

5. Ensuring payments are received: Yum Yum is not known in China yet, so not many retailers there would be comfortable with paying for Yum Yum hotdogs upfront, before they receive the product. At the same time, Yum Yum's management is worried about delayed payment or no payment if the product is shipped without a pre-payment. What would be Yum Yum's options to a balance between buyer's and seller's risks?

**NEED ANSWERS FOR THE BOLDED QUESTIONS****