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INTRODUCTION International business may be conducted in a variety of ways. The truly experienced firm with a full global orientation usually makes use of most of the forms available, selecting them according to specific product or foreign operating characteristics.
The preceding case illustrates the use of several different methods of exploiting international opportunities. Alfa made joint ventures with foreign firms, engaged in the acquisition and sale of process and product technology through licensing and turnkey contracts, and paid for goodwill (the favor a company has acquired beyond its tangible assets) by gaining the use of trademarks through licensing agreements.
This chapter discusses the most common means by which companies commit resources to the foreign sector, methods prompted either by their own desire or by external pressures that force them to accept certain parameters. The chapter also covers the problems of control when one company enters an agreement that makes another company responsible for handling its business objectives. For example, BASF and Hercules both lost control of their Mexican expansion plans when Alfa became unable to comply with the agreed-upon plans. Two forms—trade and direct investment—will be discussed only peripherally in this chapter, since they were handled in Chapters 4, 6, and 14. However, one form of direct investment, shared ownership, will be covered in this chapter as it parallels the other strategic alliances considered here.