1. This strategy seeks to enhance the long-term competitive advantage of a company by forming alliance with its competitors.
2. The objective of this alliance is to leverage critical capabilities, increase the flow of innovation and flexibility in responding to market and technological changes.
3. Similarly, a company may enter a foreign market by forming alliance with a company in the foreign market for marketing or distributing its products.
4. Strategic alliance, more than entry strategy, is a competitive strategy.
5. It enables companies to increase resource productivity and profitability by avoiding unnecessary fragmentation of ...view middle of the document...
Countertrade refers to a variety of unconventional international trade practices which link exchange of goods, directly or indirectly, in an attempt to dispense with currency transactions. It has been used by a number of companies as an entry strategy.
Countertrade takes in different forms:
i. One of them is a Barter which refers to direct exchange of goods of equal value with no money and no third party involved in it.
ii. The another form is buy-back agreement under which the supplier of plant, equipment, or technology agrees to purchae goods manufactured with that equipment, or technology.. Under this scheme, the full payment may be made in kind or part may be made in kind and the balance in cash
iii. The third form is compensation deal under which the seller receives a part payment in cash and the rest in goods.
iv. The fourth form is counter purchase agreement under which the seller receives the full payment in cash but aggress to spend an equivalent currency of money in that country within a specified period.
Eg: Pepsi Cola’s trade with the USSR. Pepsi Cola was paid in Rubles for the sale of its products in the USSR but spent this amount for purchase of Russian products like Vodka and Wine.
➢ Many countertrade deals involve more than two parties and the process becomes complex.
➢ In several cases the buyer is not in a position to offer in exchange goods which the seller...