ABSTRACT
Six major exit barriers
were identified from a literature review, based on Porter's classification
of the barriers as economic, strategic, and managerial. The effects
of these six barriers (cost of divestment, operating fit, marketing
fit, forward vertical integration, backward vertical integration, and
number of years of association of the business unit with the firm) on
the decision to exit from markets are tested by using a decision-making
exercise. The results indicate that executives consider forward and
backward vertical integration the most important barriers to exit, followed
by the cost of divestment, and operating and marketing fit. Managerial
barriers, represented by the number of years the unit is with the firm,
was found significant only for the maturity stage of the product life
cycle. As expected, the regression coefficients were negative showing
an inverse relationship between the presence of the barriers and decisions
to divest. In addition to the detailed analyses of the results, we also
discuss the managerial implications of the findings.
