When Businesses Cross International Borders: Strategic Alliances and Their Alternatives

When Businesses Cross International Borders: Strategic Alliances and Their Alternatives

When Businesses Cross International Borders: Strategic Alliances and Their Alternatives

When Businesses Cross International Borders: Strategic Alliances and Their Alternatives

Synopsis

Business firms are currently being forced to make a variety of changes to respond to both threats and opportunities in the international economy. This volume examines in detail the many ways successful companies establish a presence in overseas markets. The authors classify operations in the international environment into four categories. First, companies that do not want to actually establish local production facilities can export directly to targeted markets or engage in turnkey operations. Historically, this has been one of the most important means of acquiring international markets and continues to be a viable strategy today. Second, establishing contractual relationships with foreign companies is effective when a firm does not want to operate a wholly earned subsidy. Third, operating wholly owned facilities in other nations is one of the most preferred methods of gaining and maintaining a presence overseas. Firms typically employ this strategy either by building new facilities or by merging with or acquiring existing companies. The authors demonstrate how the approach used by business depends on the nature of the obstacles a host government places before foreign commerce.

Excerpt

Change in the international business environment occurs incrementally. Many of the powerful forces driving competition and market integration, both regionally and globally, have been visible for quite some time. Nevertheless, the convergence of these forces during the current period of flux in global politics sets the 1990s apart as a decade of unprecedented challenge and opportunity. Four prominent features define this setting for international business.

First, the global distribution of economic power is more evenly balanced than at any time in the past half-century. An era has ended during which the sheer size and dynamism of the U.S. economy provided an unmatched base for domestic industry as well as the clear-cut market of choice for foreign producers. the European Community now provides the core of a widening regional integrated market whose output is likely to exceed that of the United States by the end of the decade. the economies of East Asia are well on their way toward economic parity and are projected to remain the world's fastest growing region. Thus, despite its importance, the U.S. home market no longer is likely to provide the advantages and worldwide leverage of years past.

Second, global competition is intensifying on all fronts.

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