AUSMED: Report on Global Business Management and Market Entry Strategy

This report, prepared for AUSMED, an Australian pharmaceutical company, examines the potential for international expansion, specifically focusing on South Africa and China. As an operations manager, the student analyzes the political, financial, cross-cultural, and commercial risks and opportunities present in each country. The report includes a detailed country risk analysis, evaluating factors such as political stability, economic growth, cultural nuances, and business environments. Based on the analysis, a recommendation is made for the optimal destination country for AUSMED's expansion, along with a suggested entry mode, specifically a joint venture. The report provides insights into the challenges and prospects of global business management, offering a strategic roadmap for AUSMED's international growth. It also includes an executive summary, table of contents, references, and appendices to support the analysis and recommendations.

RUNNING HEAD: GLOBAL BUSINESS MANAGEMENT OF AUSMED
Global business management of AUSMED
Name of the Student:
Name of the University:
Author note:

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Executive summary:
AUSMED is an Australian company. This company provides continuing professional
development services to physicians and nurses. This company is interested to expand its
business. Before investing, the operation manager of AUSMED Company has to analysis
country risk factors of two countries, which are South Africa and China. The result of country
risk factor analysis will help the operational manager of this company to recommend one
country to enhance the business. AUSMED Company has to set the entry mode to develop its
services in the recommended country.

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Table of Contents
Introduction:...............................................................................................................................3
South Africa risk analysis:.........................................................................................................3
Political risk factor:................................................................................................................3
Financial risk factors:.............................................................................................................4
Cross-cultural risk factor:.......................................................................................................4
Commercial risk factor:..........................................................................................................5
China risk analysis:....................................................................................................................6
Political risk factor:................................................................................................................6
Financial risk factor:..............................................................................................................7
Cross-cultural risk factor:.......................................................................................................7
Commercial risk factors:........................................................................................................8
Recommended destination country:...........................................................................................8
Entry mode: Joint venture........................................................................................................10
Conclusion:..............................................................................................................................11
References:...............................................................................................................................12
Appendixes:..............................................................................................................................14

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Introduction:
AUSMED is the leading CPD education service provider for health professionals in
Australia. Continuing professional development is used to maintain knowledge and skills. It
is the procedure of tracking and documenting the skills, knowledge, and experience, which a
person gains both formally and informally as the person works, beyond any initial training. In
this paper, risks such as, political, cross-cultural, financial, commercial factors and
opportunities of South Africa and China while expanding its business are analyzed. From this
analysis, the best destination country to expand business will be analyzed and the mode of
entry will be analyzed.
Country risk analysis indicates the endanger of investing or granting in a new country,
appearing from probable changes in the business atmosphere, which may adversely affect
running profits or the value of properties in the country. Risk can be analyzed from many
factors, which are political, financial, economic, cross-cultural, corruption, location, transfer
risk factor. Country risk analysis indicates the potentially negative impact of the country’s
atmosphere on the global company’s cash flows.
South Africa risk analysis:
In this part, the country risk analysis of South Africa will be done to measure the risk
and opportunities. Multinational companies can use this risk analysis report as a screening
tool to avoid investing in countries with extra risk.
Political risk factor:
Political risk factors mean political stability, the role of the ruling party, the influence
of the political party in business. South Africa has a stable democracy, which is ruled by the

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African National Congress. Signaling institutional, concern over transparency and corruption,
policy-making weakness, instability of government, enhanced non-payment risk are six
political risk factors. This country is one of the rare examples where all these six political risk
factors have been falling continuously. The mismanagement of the government has been
creating this negative impression and enhancing the debt level for the treasury (Brink 2017).
Financial risk factors:
Financial risk factors indicate the present and potential state of the economy of South
Africa. The South African Reserve Bank (SARB) put out its report, which estimates the
financial risk of South Africa. The SARB publish the second edition of Financial Stability
Review (FSR) to focus on the risk analysis. The SARB identified four major risk factors,
which are affecting the finance of South Africa. Weaker international economic growth, an
international factor, has the proneness to interrupt the local economy. This is a medium level
threat (Fatoki 2014). Unforeseen and faster than expected tightening of international financial
factor, a financial threat for the South African economy is related to the US fiscal, monetary
policy and currency. SARB detects the likelihood of lower domestic economic growth as a
high-risk factor for the financial situation of the country. The fourth financial risk factor is a
cyber-security risk. This factor has a high impact on the South African financial situation.
This nation is unable to manage the growing level of international interconnectedness
because of this risk factor. The latest economic growth forecast for this country is 1.9% for
2019 (Africa 2019).
Cross-cultural risk factor:
In South African society, the family form is the main unit. Black South Africans are
more flexible to time. White South Africans manage time in a more narrow way. Respecting
ancestors and elders is an important part of African culture (Gollnhofer and Turkina 2015).

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The citizen of South Africa likes to see fair situations in business, where both sides profit
something. To get a good overview of the South African culture, the cultural dimension of
Hofstede is important. The people of South Africa accept hierarchical order as this country
scores 49 in power distance dimension. With a score of 65, it can be said that the society type
of South Africa is the individualist type. In the South African society, it is expected that
individuals will take care of themselves and their families only. In the masculinity dimension,
this country scores 63 and that is why the society of this country is masculine. In a masculine
country, citizens live according to their work. With a score of 49 in uncertainty avoidance, it
can be said that this country has a low desire to avoid uncertainty. The culture of South
Africa is March normative because this country scores 34 in the long term orientation
dimension. South African citizen in these societies has a heavy concern with establishing the
complete truth. The South African culture is indulgence because this country e scores 63 in
indulgence dimension. Citizens of this country have a positive attitude and impulse towards
positive beliefs (Hofstede Insights 2019.)
Commercial risk factor:
The business atmosphere of South Africa is acceptable. Information related to
corporate finance is not sufficient. In fact, most of the time available information is
incomplete. The collection of debt is not sufficient in South Africa. The institutional structure
developed by the government has shortcomings. The legislative environment of this country
delivers protection for investors. South Africa is facing the problem of high unemployment.
This country has less quantity of skilled labor. Infrastructure such as transport energy is not in
good condition in this country. Social risk such as crime strikes is common in this country
due to inequality and poverty. Political risk, financial risk, cross-cultural risk, and
commercial risk can affect the behavior of corporate payment.

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China risk analysis:
In this part, the country risk analysis of China will be done. Through this analysis,
AUSMED can detect risks and opportunities. This organization will get benefit from this
analysis before expanding its business.
Political risk factor:
The communist party rules the People’s Republic of China. The most powerful
decision-making body within this party is Central Politburo, which is a standing committee.
Strong government and powerful parties are present in this country. Medium-term
government stability is present in China. The character of the judicial system of China is
highly politicized. Intellectual property theft, which is a risk to run business, is present in this
country. The ruling party is less interested to develop intellectual property rights protection
and tax. President Jinping Xi is interested to control the corruption issue. The contract
enforcement of this country is very much efficient. China holds the six rankings
internationally according to the World Bank. Transparency level is insufficient in this
country, especially in the local area. The strong government easily control protests due to
land equation, corruption, labor disputes, and pollution (Gobinda and Haider 2014). To
support privacy, consumer right, and acceptance of digital signatures, the ruling party has to
create certain regulations. Political risk in this country can be characterized as moderate.
AUSMED can analyze the political risk factors of the People's Republic of China before
providing ‘continuing professional development' in this country.

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Financial risk factor:
The financial system risk in this country is moderate. The Chinese insurance
regulatory commission manages the insurance industry. This country maintains a strong
external economic position. An adequate amount of foreign exchange reserves is held by this
country. The present account of China is at a persistent surplus. The major reason for the
rapid economic expansion of this country is credit growth. China needs to curtail debt
dependence and maintain strengthening economic zone regulation. Currently, in this world,
China is the second-largest economy (Lu, Guo and Liu 2013). The estimated per capita
income of this country is USD 9608. The estimated gross domestic product is $27.3 trillion
(Data.worldbank.org 2019). The estimated gross domestic product growth rate of this country
is 6.2 %. The rate of growth of this country is impressive. The estimated inflation rate in
China is 2.7 %. The interest rate has increased by the people’s Bank of China. Another
economical risk factor is high property prices (Stats.gov.cn 2019).
Cross-cultural risk factor:
China is the most populated country in this world. The idea of being Chinese is a
cultural concept. The nature of the Chinese culture and society can be classified as
‘collectivist’. The main characteristics of Chinese culture are the importance of family,
cultivation of morality, emphasizes hard work, hierarchical social life structure. There are 5
official religions, which are Buddhism Taoism, Protestantism, Islam, Catholicism, recognized
by the Chinese government. To compare the cultural differences, Geert Hofstede's cultural
factors are important. the power distance dimension refers that inequality is acceptable in
Chinese society. This country holds a high ranking on the power distance dimension with a
score of 80. With a score of 20, the culture of China is highly collectivist in the individualism
dimension. Chinese people prefer the interests of the group. This country scored 66 in the
masculinity dimension. Chinese society followed a system, which focuses on competition,

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success, achievement. In the uncertainty avoidance dimension, China scored 30. With a score
of 87, this country has a very efficient culture in the long-term orientation dimension. This
dimension refers to the way of dealing with new obstacles and their habit to mention their
own past. The society of China is characterized as restrained because this country scored 24
in the Indulgence dimension (Hofstede Insights 2019).
Commercial risk factors:
At present, inefficient credit allocation is a major financial risk factor for China. The
Government of China favored most of the heavy industries. In favor of the heavy industry
sector, the irregular credit allocation creates inefficient credit allocation. An excessive
amount of bank loan on the real estate sector and the rapid growth of dim banking products
have increased the systematic risk to the Chinese financial system (Li 2014). Since 2014, the
huge amount of unpaid debts created a negative monetary policy in this country. Small and
average-sized privately-owned enterprises are facing the problem of this situation. These
small and average-sized enterprises are facing a hard time to access Chinese Bank financing.
The financial stability situation and gross domestic product growth are not stable in this
country (Saksena, Hsu and Evans 2014).
Recommended destination country:
China, which a developing country, is the most populated country in the world. The
reason for choosing China as a destination country to expand the business of AUSMED will
be analyzed in this part. The size and population of China are appealing to multinational
enterprises to expand their business in China. The population of China is highly diversified.
Cultural practices in this country defer dramatically. Citizen of this country gives priority to
the organizational unit (Mo et al. 2013). The consumer market of China presents huge
potential for growth in the continuing medical development service sector. The Chinese

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government developed the National system to imply CPD in1996, but it was truly
implemented until 2001 (Murray 2014). The National health and family planning commission
of China fixed the goals of the CPD system. Those goals are to maintain the high professional
principals of physicians, improve the practice abilities of physicians, improve the features of
health care service, fulfill the needs of the improvement of community health and disease
management (Bačáková and Closs 2013). In this country nurses, mast earns 25 credits per
year and physicians mast earn 15 credits per year. Fulfilling the certification mark taken as
evidence for an early performance review in this country. In 2009, the Chinese health care
reform plan focused on the primary care service (Stott 2017).
The growing economic market of China is an important reason to expand
AUSMED CPD services. The market of this country is full of potential. The Chinese market
is attractive for all sizes of foreign companies. Emerging new China means greater costs for
foreign business. The margin of profits is larger than any other market in this world, despite
the new higher cost for foreign business. The law and regulations have revised by the Chinese
governments to create a fair open market. To make the economy strong, the Chinese
government develop investment policies including taxation, tariff. The new policy of this
Chinese government is promoting international companies to do business in China. New
tariff policies on imported products are helpful for foreign companies to develop business in
this country. This country has a lot of skilled labor and a competent workforce. The highly
educated workforce in China is growing, which means getting skilled staff from this country
is much easier. This country is politically and economically stable. In comparison with South
Africa, China is a far better destination country to expand its business for AUSMED.
Domestic stability helps economic progress. The business environment in China is far better
than in South Africa.

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The population of China can be beneficial for AUSMED to provide health
professional education and modern technology (Ausmed.com 2019). This company will help
the Chinese government to improve public health services.
Entry mode: Joint venture
AUSMED has to follow the joint venture entry mode to expand its business in China.
Through the joint venture entry mode, AUSMED can be beneficial for several reasons. To get
access to the domestic market of China joint ventures in promoting will help the company. It
will be an advantage for this company to utilize a well-educated and low-cost labor force in
its service. Local resources of this country can be accessed by this entry mode. The
Government of China and deliver favorable treatment services tax exemption, security,
support. The Government of China has several targets in the foreign joint venture (Shenkar,
Luo and Chi 2014). Foreign joint ventures will increase job opportunities, industrial
efficiency, maintaining foreign exchange. Because of these benefits, the Chinese Government
supports foreign industries.
Selecting the investment location for joint venture entry mode is an important
decision. AUSMED has to choose a specific location, where proper infrastructure is
available. Beijing, Pudong, coastal cities, the special economic zones can be the perfect
investment location. Before starting the joint venture, this organization should approach the
Chinese government to collect useful information about the location and aspect. The Chinese
government regulates most of the joint ventures (Zhang, Luo and Toppinen 2015). After
getting the information from the Government of China, AUSMED can analyze the market
and future demand of the CPD service. For joint venture entry mode, using the best business
partner is crucial. This organization has two analyses of the strengths and weaknesses of the
potential business partner from China. The Chinese government offers special incentives for

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joint venture investment. These special incentives vary regions in two regions. That is why
the physical location of the best Chinese partners is important. AUSMED has to be careful at
the time of negotiation with the Chinese government. After the negotiation process is done,
this organization and the Chinese government will create a memorandum of understanding.
After the investment location partner and letter of the intent process are done this
organization has to choose the legal structure of the foreign investment (Li and Parboteeah
2015). For the Chinese Market, joint venture entry mode is most probably the best long-term
strategy. AUSMED can focus on the distribution system in China because the joint venture
will help this organization to avoid quota and tariff issues. Explain its service China this
organization has to follow a joint venture entry mode.
Conclusion:
As an operation manager of AUSMED Company, In conclusion, it can be said that,
before expanding its business, the country risk analysis of South Africa and China will help
Australia based professional education and the latest technology service provider AUSMED
Company. After the country risk analysis, it can be said that China can be the best destination
country to expand the business. To achieve business goals, this country is the best
destination. AUSMED Company must follow the joint venture entry mode to enter the
Chinese market.