Analysis of Factors Influencing Business in China
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Added on 2020-01-07
Analysis of Factors Influencing Business in China
Added on 2020-01-07
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WM MORRISON SUPERMARKET PLC ENTRY INTO CHINAStudent’s Name:Course:Instructor’s Name:Institution:Date Due
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1SECTION 1: MACRO-ENVIRONMENTAL FACTORS OF CHINESE MARKET....................1PESTEL analysis..........................................................................................................................1Porter 5 analysis of retail industry in China.................................................................................4SECTION 2: ANALYSIS OF THE FIRM’S RESOURCES AND CAPABILITIES TO ENTERCHINESE MARKET.......................................................................................................................6VRIO resource analysis...............................................................................................................6SECTION 3: REFRAMING MISSION AND VISION STATEMENT.........................................8SECTION 4: SWOT ANALYSIS OF WM MORRISON SUPERMARKET PLC IN CHINA.....9CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................12
INTRODUCTIONOverview of the companyWm Morrison supermarket plc is a United Kingdom fourth largest supermarket whoseheadquarter is in Bradford, West Yorkshire, England. The supermarket chain was founded in1899 and currently, it has 515 stores in England, Wales and Scotland. By 2015, the supermarkethad a market share of 11% in united kingdom indicating a significant market size while in 2015,the company had a profit of £222million(Morrison,2016).Internationalization of Wm Morrison supermarket plcChina, which is a current economic giant, offers Morrison a tremendous opportunity forexpanding its business into the global arena. However, China has complex business environmentthat requires apt strategies and a lot of work to meet the challenges that are based on uniquemarket dynamic, complex legal requirements and a different business approach to attain asignificant market share. The paper will analyze the macro environmental factors of theinvestment destination that entail PESTEL and porter 5 industrial analyses, the analysis ofresources and competence through VRIO, reframe the mission and vision statement in line withthe Chinese market and recommend mergers and acquisition as the entry mode.SECTION 1: MACRO-ENVIRONMENTAL FACTORS OF CHINESEMARKETThe analysis external factors that influence business in China can be based on thePESTEL model and Porter 5 analysis.1
PESTEL analysisPoliticalAfter World War II, China became a communist state under Mao Zedong established anautocratic social system and a politically independent nation that was characterized by strictcontrol over every day’s life. Basically, Mao emphasized on political revolution rather thaneconomic posterity in the quest of ensuring China’s sovereignty. However, after 1978, whenDeng Xiaoping succeeded him, the focus was on a market oriented economy rather than statecontrolled economy and enhanced the social welfare. At the moment, China is the second largesteconomy in the world as the government pushes for foreign direct investment and has opened upthe investment space that organization such as Wm Morrison supermarket plc. have anopportunity of investing in the country. At the moment, the living standard of people hasincreased significantly while the room for personal choice has increased tremendously, althoughthere is still some political control with limited democratic space. The opening up of politicalspace is an opportunity for the organization as the political stability and will are vitalcomponents for the growth of any business as a result of minimal political risk(Sanderson,2008).Economic factorsChina has recorded a tremendous economic growth and superb performance in the pastfour decades. In terms of gross domestic production, China is the second largest economy. Whenthe purchasing power parity (PPP) is taken into account, China had a GDP of $7.20 trillioncompared to America’s $14.99 trillion, indicating that China had become a major economicforce to reckon with(Tallman,2015). In addition to this, good economic performance resulted inhigh employment rate and thus, the disposable income of the populace increased, and though2
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