A contingent planning process for countertrade based projects: A decision analytic perspective

Countertrade (CT) is a major ingredient in 30–50 percent of world trade. A large number of companies engaged in CT practices do not enjoy the benefits of a clear process for formulation and evaluation of strategic alternatives. Furthermore, among those involved in CT there exists a general reluctance to adopt non-traditional strategies in an area where traditional approaches are at best insufficient. This paper provides a normative and logical approach to CT strategic planning for companies that are, or consider being, involved in CT. We provide an analytic framework, for incorporating contingency planning, in the strategic management of countertrade or barter agreements with the objective of increasing the competitive edge and the profitability position of the firm. The prescribed approach is motivated primarily by the uncertainty encountered in dealing with or within developing nations while using any one of the various formats of countertrade – a modern outgrowth of ancient barter. The approach taken invokes concepts in utility theory, decision and cost/benefit analysis, and in integer programming, and it emphasizes flexibility in the planning process through the availability of relevant and up-to-date information pertaining to the realm within which the firms' operations take place.