International Business Expansion to South Africa Coursework - 1

International Business Expansion to South Africa - Coursework Example It is also seeking to enter an international joint venture with SAPumps to repair and/or produce components and parts. This paper examines these major events in-depth and gives RRP advice on how to proceed with its international expansion drive. In the first part of the paper, we examine the risks involved in the contract RRP has with its existing sole agent, Agent B and the consequences it will bring to the company if it signs a contract with the new agent, A. It goes further to examine how the company can use commission rates, flexibility, and agency arrangements to control A’s performance. In the second part, the research examines the foundations and structures of the new international joint venture that is on the verge of entering with SAPumps. It looks at how inventory will be treated, customer relations and the contract structure as well as marketing and distribution of the final products. The issue with Agency B is a very complicated one. Agency B has the sole agency rights for RRP in South Africa. This makes them the only agency that can source for projects in South Africa for RPR. If care is not taken by RPR, it could get involved in a breach of contract with Agency B if it goes ahead to sign this contract with Agency A. If this happens, Agency B will be entitled to claims for damages. Secondly, if RRP goes ahead to sign this contract with Agency A, granting it exclusive rights without a proper care with regards to the agreement with Agency B, Agency A will not get access to the exclusivity it desires. This could also pose legal problems for Agency A and B in their operations in South Africa. This arrangement is a principal-agency arrangement in an international context. A principal-agent relationship exists when a party pursues to direct the actions of the opposite party to his own ends for mutual benefits like shareholder-manager and employer-employee relationships (Jager, 2008).