Contract with International Markets?

Turnkey Operations are contracts for construction of operating facilities that are transferred to the owner after commissioning for a fee. Most common in large multi-year projects like construction of infrastructure like airports, oil refineries, power plants, roads or railways they are a way for the owners to mitigate risk up front by contracting away the associated management risks of building a major project in a foreign nation.

Under a management contract mode of market entry one company provides another company with managerial expertise for a specified period of time. This maybe in exchange for a lump sum payment or a continuing fee on a % of sales value or volume for example.

Sectors that commonly use management contracts are utilities services and it may be possible in developing markets where they need assistance from developed markets to manage new infrastructure like water management for example.

Another example might be public council services such as lawn mowing and parks maintainenece and building management services provision which can also be international in scope and nature. Management contracts maybe useful entry modes where the home party has knowledge and expertise but cannot own the assets off-shore and the other party has a dependence or reason for management expertise.

Risks include reliance on the contract for enforcement and remuneration and the possible limited time span. In addition it may be hard to create and grow any brand equity or awareness in the case of some contract management services.