Understanding the international retail divestment process

Cairns, Patricia and Doherty, Anne Marie and Alexander, Nicholas and Quinn, Barry (2008) Understanding the international retail divestment process. Journal of Strategic Marketing, 16 (2). pp. 111-128. ISSN 0965-254X

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Abstract

To explore how retailers manage and respond to the whole of the divestment process, considering how they take the decision to divest international operations, the process of divestment, the effect of divestment and the response to divestment. Employs an interpretive, qualitative approach to examine the international retail divestment process with 32 in-depth interviews, focusing on the experience of one company to facilitate greater understanding of the connection between events, illustrate the richness of the data and emphasize the triangulation of current and ex-employee perspectives. Five fundamental issues affect the process of divestment: an inward-looking corporate culture, the need for stability in the domestic market, negative consequences of persevering with a failing strategy internationally, new management and entry mode strategy. Finds that changes in management are a prior condition for divesting and that the entry method by employed by the firm is key to the divestment decision, remarking that when the case company focused its strategy on its core domestic business, owned store operations abroad no longer fitted with the strategic operation of the firm and were divested, these being stores that had been acquired, established through joint-venture or added to the operation on a store-by-store basis. By examining the process in a more holistic manner, identifies that there may be myriad reasons which affect the decision to divest internationally. In future research, advocates the use of the qualitative method to research this type of sensitive topic and using case studies to explore whether these stages are relevant to other retail firms or sectors. Argues that divestment should be viewed as an integral element of internationalization strategy which, over time, is likely to become part of overall company strategy. Conceptualizes the process of divestment based on in-depth qualitative primary research using four stages: decision, process, strategic reorientation and response.