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Supporting Market Entry Decisions For Global Expansion Using Option +Scenario Planning Analysis  

Kim, Byung-Il (연세대학교 토목공학과)
Kim, Du-Yon (연세대학교 토목공학과)
Han, Seung-Heon (연세대학교 토목공학과)
Publication Information
Korean Journal of Construction Engineering and Management / v.10, no.5, 2009 , pp. 135-147 More about this Journal
Abstract
The world has witnessed the dramatic expansion of international construction markets during the last decades, particularly around the developing economies and energy resource-rich countries. However, despite the booming markets, the risks of emerging regions have also increased under the rapidly changing environments confronting the global contractors. Most of all, success in overseas business mainly depends on selecting the right market to enter. Accordingly, the right market selection requires global firms to carefully carry out the scientific market entry decision by evaluating country risks, market prospects, firm's capability, level of competition, and among others. This study aims at developing a market entry model by the use of real option analysis (ROA) and scenario planning, which addresses the corporate strategic flexibility against the uncertainties encompassing the overseas construction markets. Based on the suggested approach, global contractors are expected to make a better decision rather than a typically static approach in pursuing, postponing, or abandoning a prospective market to their capacity with a concurrent consideration of uncertainties as well as its option value.
Keywords
International Construction; Market Entry Decision; Real Option Analysis (ROA); Scenario planning; Risk Analysis;
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