Exit Strategies in International Business
When a company starts a venture nationally or internationally, it needs to have a plan of how it would enter the new market, capture the market and exit when the task is completed. The last part is also known as an exit strategy which is defined as, 'The written goals for the succession of a businesses' ownership and control, derived from a well thought out and properly timed plan that considers all factors, all interested parties, and the personal goals of the owners in a manner and time period that is accommodative to the business, its shareholders, and potential buyers.' (Leonetti)
Exit strategy is important because it allows a firm to decide how it would end the project once the value from investment has been derived. Exit strategy may also be needed in case of failure of the venture. In both cases, there are multiple ways in which a company can make an exit after having been either successful or not in the international market. For example a successful U.S. company decides to enter the Chinese market. This apparel company wants to enter the children's clothing sector in China. For this reason, it will need an action plan which can also be called a business plan for that specific venture. Now after the company has entered and started the implementation of its plan, two possible scenarios can emerge. The company will be either able to meet its objectives in the given time frame or it will not be able to do so. In both cases, it might look for an exit strategy. In the case of success, this exit strategy helps in turning the company into a bigger entity or removing the presence of the company from the new market because the company no longer wants to invest in that market or needs its resources for some other venture. In the case of failure, the reason for exit strategy is simple and that is the company no longer wants to waste its resources on a thankless venture.
Types of Exit strategies:
We shall now discuss some...
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