Hip Hip Hooray is a Vancouver-based children's clothing manufacturer whose unique designs,excellent quality,and interesting fabrics have allowed the company to sell across Canada with great success.Hip Hip Hooray now wants to expand into foreign markets.The company was founded and is run by two mothers who could not find what they wanted for their own kids and so made it themselves,and they do not have a huge organization behind them.They want to ensure they can protect their reputation but they are unsure whether their production arm can expand fast enough if their sales take off.Discuss the advantages and disadvantages of the various forms of international trading arrangements that Hip Hip Hooray might use.

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The Answer is Hip Hip Hooray can either become involved in both manufacturing and marketing its clothes in a foreign country,manufacture in Canada to sell elsewhere,or licence manufacturers outside Canada to make and sell its designs.
If the company wants to manufacture in Canada but have a foreign company distribute in other countries,it can set up a distribution agreement with a distributor in the particular country.This would allow continued control over quality while the established distribution network in the foreign country would avoid the need for Hip Hip Hooray to establish a sales force or involve itself as an employer in that country.Since the agreement will govern all aspects of the relationship,it has to be very carefully drawn up and must address all matters relevant to the distribution of Hip Hip Hooray's goods and the protection of its interests.For example,it should cover such matters as what will be distributed where;a detailed set of obligations to be met by the distributor (size of sales force,what the distributor will do,size of inventory,limitations on cutting third-party deals,sales volume to be met,etc. )and by Hip Hip Hooray (quality standards,advertising materials,catalogues,samples,delivery times,etc. ),as well as how any disputes will be dealt with,and insurance and transportation matters.If the right distributor is picked,this is a very effective means for Hip Hip Hooray to achieve its expansion goals.
The alternative of setting up its own sales force or even its own manufacturing plant is probably too onerous for Hip Hip Hooray since it involves a huge financial investment and knowledge of a whole new set of national and local laws.However,it would give the company total control and easy access to that market.
Alternatively,Hip Hip Hooray could enter into a joint venture with a firm within that country,which would reduce the amount of involvement,financial and otherwise,required while giving the company access to the foreign market as a corporation producing within the market.Foreign share ownership may,however,be an issue in that country,and Hip Hip Hooray will have less control than if they were operating on their own.
Hip Hip Hooray might want to consider a licensing agreement with an established manufacturer in the foreign location,which would bring the company royalties and control over quality without the manufacturing responsibility there.Hip Hip Hooray would have to make sure its trade name/mark,fabric,and clothes designs would be protected there,so the company will need expert advice about copyright,trademarks,possibly industrial design,and licensing agreements.This might work well for Hip Hip Hooray since it would avoid all the manufacturing and distribution problems associated with the other possibilities.However,as a newcomer to the market,the royalties the company could command would probably bring much less profit and it would have more difficulty controlling quality or distribution problems.This could have a disproportionate effect on Hip Hip Hooray's reputation,as it is not an established name in the foreign market.

Hip Hip Hooray Is a Vancouver-Based Children's Clothing Manufacturer Whose