Creating Meaningful Switching Options in International Operations

Article Abstract:

By entering foreign markets through the use of local operators or intermediaries, such as licensees and distributors, companies can reduce their risk exposure and the resource demands of internationalisation. However, at a later stage, the entrant firms may want to shift to a higher control mode--perhaps a sales or production subsidiary. A difficult question, therefore, is how a company can create meaningful strategic options so as to facilitate a subsequent shift. In this article, issues surrounding the achievement of strategic flexibility in operation mode use are examined. A matrix is developed to illuminate the options of revealing or concealing future intentions regarding integration or the termination of a relationship with the foreign partner. A number of company cases are presented to illustrate the way in which these options may be created to facilitate a future shift from one operation mode to another within a foreign market.

United States, Research, Business, Business research

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Incumbents' use of pre-entry alliances before expansion into new technical subfields of an industry

Article Abstract:

Most firms which have established themselves in their particular industries remain wary of venturing into developing technical subfields because of uncertain market conditions. Big corporations would rather form strategic alliances with other firms to penetrate such markets. Through these alliances, companies will be able to realize the market's worth and gather information which will eliminate uncertainty.

Management, Strategic alliances (Business), Diversification in industry, Industrial diversification, Barriers to entry (Industrial organization), Barriers to entry

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