Chinese Market External Environment Analysis
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Added on 2020-02-05
Chinese Market External Environment Analysis
Added on 2020-02-05
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1STRATEGIC MANAGEMENT Strategic Management NameCourseCollegeDate
STRATEGIC MANAGEMENT2Abstract China is an emerging and fast developing nation that provides opportunities for new investmentfrom foreign investors. Despite the country having great potential for economic growth andprovision of low labor costs, firms must be cautious of due to political and cultural environmentdifferences which cause risks and uncertainties for the foreign investors. This paper will discussthe external environment in China and various opportunities and threats. Table of ContentsAbstract.......................................................................................................................................................2Introduction.................................................................................................................................................2The Chinese Market External Environment Analysis..................................................................................2Opportunities and threats.......................................................................................................................2Industry Competition in China.................................................................................................................5Morrison’s Vision and Statement................................................................................................................7SWOT Analysis of Morrions.......................................................................................................................8S: Strengths.................................................................................................................................................9W: Weakness...............................................................................................................................................9O: Opportunity............................................................................................................................................9T: Threats....................................................................................................................................................9Business-level international strategy.....................................................................................................10Conclusion and Recommendation.............................................................................................................11Bibliography..............................................................................................................................................12
STRATEGIC MANAGEMENT3IntroductionRecently, China has started to make reforms in its foreign and has started opening itsenvironment to outside world. The issue of globalization has been a major factor to consider. Thecountry’s economy has developed to be second largest economy globally only coming second toUnited States. This has been established through the measure on purchasing power parity. TheChinese government has the aim of quadrupling its economy gross domestic product by the year2020. It also has the goals of doubling its per capita (GDP World Bank Report 2008). TheChinese government has reduced its involvement in the market and has been evident since 1978.The government has encouraged a dual economic system that has developed from being socialist,centrally planned economy to a being a socialist market economy system. The Chinese economyhas an economic system market with socialist characteristics. The rapid growth in the industrialsector has been due increasing advancement in the field of technology, increase in productivityand increase in foreign direct investments.The Chinese Market External Environment Analysis Opportunities and threats Currently firms have been practicing offspring, outsourcing and relations. These have beeninfluenced by various reasons such as production. The revolution of globalization has establishedboth opportunities and threats for individuals, firms and countries. The environment ofinternational business is diverse from that of domestic business environment. There arise issuessince the business must carry out business operations in diverse international environment andthere arises issues such as exporting, importing and conversion of currencies (GDP growth rate). There are a number of reasons as to why many international firms have relocated their businessto china. These reasons will also show how globalizations or the external factors to a country can
STRATEGIC MANAGEMENT4influence business operations in diverse ways. China provides a skillful population in reverseengineering. The Chinese skillful population has perfected this art which helps increasingproduction at a low costs. This business environment also avails high quantity of skilled laborwhich ahs help assure foreign companies to invest and run their business operations in thecountry. For firms to operate internationally, it is essential to have enough skilled and technicallabor which is provided at low cost. For the international firms in China, there I provision oflabor at low wages and salary rate. For example it would be easy for Morrisons to operate inchina due to the availability of skilled cheap labor. China offers an extensive land area for investment. This extensive land allows companies toacquire land on lease basis and develop it. This ensures that the firms have the freedom to makemaximum use of land resource. Another opportunity factor is that China provides sufficientinfrastructure (GDP World Bank Report 2008). The country avails a vast high quality roadnetwork and widespread infrastructure. The good infrastructure is good for firms. For efficiencyin the supply chain, the company has a great road networks and other facilities such as ports. Thecountry has an abundant source of raw materials. These ensures that companies can get highquality raw materials at a low costs. For instance international individuals and firms move tochina to purchase affordable products and services. Unlike other countries, China has aconsistent and reasonable tax system. They taxes levied are affordable and reasonable. Thisenables businesses to reduce cost of doing business hence high quality products and services ataffordable prices for the consumers.As much as Chinese economy provides new prospects for international businesses, theenvironment also provides threats. The Chinese economy has been growing at a fast rate in therecent years. Most international companies wish to relocate their business operations in China
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