In planning entry into a blocked market, the company must identify opponents, allies and neutral groups.
Its aim is to overcome the opposition, and it can choose from three broad strategies;
- Neutralize opponents by offering to compensate them for any losses. The theory of welfare economics holds that a proposed action will generally be supported if everyone benefits or if those who benefit can satisfactorily compensate those who are hurt. Compensation costs should be included as part of the total cost when determining whether in pays to go forward with the project.
- Organize allies into a coalition. The company’s potential supporters may be scattered in the community and their individual power is less that their potential collective power. Thus the company can further its cause by creating a coalition of allies.
- Turn neutral groups into allies. Most groups in a community will unaffected by the company’s entry and thus indifferent. The company can use influence and rewards to convert these groups into supporters.
A growing number of companies are forming strategic alliance – licensing arrangements, joint ventures, management contracts and consortia to overcome blocked markets.
Examples of strategic partnering in the automobile industry include General Motors-Toyota and Ford-Mazda.
Intercompany networking offers a superior means for security entry and operating clout in otherwise blocked markets.
Still another approach is to harness the power of one’s government to aid in opening another country’s market.
Forging a Grand Strategy
