Introduction
The strategic choice approach suggests application of a particular mode of entry depending on the combination of the external business forces and its environment. The company’s ability to survive in a given business platform is determined by other diversified factors rather than its competitive strategy (Friend, 2005). In such a scenario, it calls for a massive control for both the firm and the industry characteristics.
Description of theories
According to a study conducted in the industrial sector, strategic choice approach indicates that industry characteristics impact on foreign entrant’s performance (Montanari, 1990). Similarly, business variables effect firm’s survival and success in a significant manner. On the other hand, business growth and penetration by other foreign firms and massive seller concentration can significantly impact the company’s survival in the international market (Friend, 2005).
Analysis
Commonly, entry of foreign competitors in the market intensifies contention in the industry. Rivalry reduces the ability of the new foreign entrants to acquire shares in the market that determines their survival. Growth in businesses opens up opportunities for the international entrants to establish themselves in the areas less known to their rivals (Montanari, 1990). The opportunities created by the new businesses increases the knowledge of the international entrants to survive in the business. The new businesses are believed to be focusing in investments, innovation and high R& that offers them a greater market advantage than their rivals (Lake, 1999).
The strategic choice approach also indicated that features of a firm may also determine the survival of international entrants. Firms characteristic may include, size, governmental support, mode of entry applied and technological competence
Conclusion
In conclusion, strategic choice model involves different actors in the market to ensure survival of the new entrants. The foreign entrants must also invest in business development and education of their customers so as to reduce the risk of failure. In addition, it considers the costs and benefits accorded to the new entrants, as a result, of their participation in the market (Lake, 1999).
Extending Conversation
. Lastly, the strategic choice approach acts an analytical perspective basing its focus on the individual decision models. It mainly aims at shaping and monitoring the context of decisions made in business. The strategic choice approach applies the same principles as the rational choice analysis and the game theory in business. They deal with costs & benefits and interdependence of actors (Friend, 2005).
References
Friend, J. K., & Hickling, A. (2005). Planning under pressure: The strategic choice approach. Amsterdam: Elsevier/Butterworth Heinemann.
Montanari, J. R., Morgan, C. P., & Bracker, J. S. (1990). Strategic management: A choice approach. Chicago: Dryden Press.
Lake, D. A., & Powell, R. (1999). Strategic choice and international relations. Princeton, N.J: Princeton University Press.
