Global Business Report: Potato Corner's Market Entry Analysis in China

This report provides a comprehensive analysis of Potato Corner's potential market entry into China. It begins with an executive summary highlighting the key aspects of global business and the favorable business environment in China for the company. The report then delves into the external business environment, examining political, legal, economic, and socio-cultural factors. An in-depth internal business environment analysis follows, utilizing the resource-based view and VRIO analysis to evaluate the company's resources, competencies, and competitive advantages. The report then explores various entry strategies, recommending Foreign Direct Investment (FDI) as the most appropriate approach. Justification for this strategy is provided, along with a proposed implementation plan, including a timeline, key processes, organizational structure, and human resource management considerations. The report concludes with a summary of the key findings and recommendations, emphasizing the importance of adapting to the Chinese market and leveraging the company's strengths for successful expansion. The report is a valuable resource for students studying global business and market entry strategies. The report also includes a bibliography.

RUNNING HEAD: GLOBAL BUSINESS
MANAGEMENT
GLOBAL BUSINESS

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Executive Summary
Global business allows the company to avail higher financial return. Potato Corner is one of
the companies engaged in global business. For market expansion in China, it is
acknowledged that China offers passable business environment to the company. The
company attains adequate resources to initiate business operations in China. Human resource
and goodwill are two resources that will offer sustainable competitive advantage.
There are multiple strategies for making an entry in foreign market. The company should
develop the use of Foreign Direct Investment to initiate business operations in China.
For the effective implementation of FDI strategy, the company should develop the use of
Hierarchical organizational structure. Additionally, it should lay higher emphasis on Human
Resource Management and adhering to the timeline. Devoting adequate attention over these
aspects will allow the Potato Corner to easily enter and gain success in China market.

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Contents
Introduction................................................................................................................................3
External Business Environment.................................................................................................3
Formal.....................................................................................................................................3
Informal..................................................................................................................................5
Internal Business Environment..................................................................................................5
Resource based view..............................................................................................................5
VRIO Analysis.......................................................................................................................6
Competencies.........................................................................................................................7
Entry Strategy.............................................................................................................................8
Licensing................................................................................................................................8
Joint Venture..........................................................................................................................8
Foreign Direct Investment......................................................................................................8
Appropriate Strategy...........................................................................................................9
Justification.........................................................................................................................9
Implementation..........................................................................................................................9
Timeline................................................................................................................................10
Key process..........................................................................................................................10
Organizational Structure.......................................................................................................10
Human Resource Management.............................................................................................11
Conclusions..............................................................................................................................11
Bibliography.............................................................................................................................12

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Introduction
The report focuses on ‘Global Business’. It refers to the company engaged in the international
trade across the world. Focusing on the company, Potato Corner is a globally recognized
company offering fast food to the customers. It is a Philippine based company founded in
1992. It has about 500 branches in the country (Potatocorner, 2019).
Emphasizing on the assignment structure, the initial section includes the business
environment of China. It involves the use of formal and informal factors affecting the
company. The next section focuses on evaluating internal business environment. The passing
section includes analysing the marketing entry strategy in China. It also includes selecting the
suitable strategy for the company. The succeeding part includes information based on Human
Resource Management, organizational Structure, and key process for the effective
implementation of the market entry strategy.
The key purpose of the report is to effectively analyse the business environment for the
entrance of in Chinese market.
External Business Environment
Every organization differs in its business environment. There are multiple factors prevailing
in the country that lays an impact on the business organization and its process. These mainly
include Political, Legal, Economic, Social or Cultural factors. A careful analysis of business
environment is highly significant for the smooth functioning of business operations. It assists
the company in determining that weather a country offers unfavourable, passable, or excellent
business environment. It assists the company in fulfilling its objectives. It provides key
information about the major happening in the country. It enables the company to gain an
insight of possible opportunities and threats. Moreover, it allows in forecasting the changes
prevailing in the country concerning business environment (Gupta, 2013). Below is the
detailed analysis of external environment of China.
Formal
Political Factor: It includes factors such as government stability, integrity, policy and
foreign trade. It also empathizes on tax policy, labour laws and trade restrictions (Banham,
2010). The corporate tax rate in the country is 25%. Additionally, mediate level of
government integrity prevails in the country. It provides fine degree of freedom to labour and

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business enterprises. However, it offers low trade freedom to business organizations
(Heritage, 2019). It is assess that Chinese law fails to safeguard the labour rights. The
workers of china are facing struggle in fulfilling their rights. It mainly includes minimum
wages, social security benefits. Many Non-Government Organizations like ‘The Panyu
Worker’s Service Centre’ are fighting for the labours right in china.
It has fine corporate tax rate. Additionally, it offers fine degree of government stability.
However, it has poor control towards protecting the labour rights. Therefore, it depicts that
China does not offer fine political environment for the company.
Legal Factor: This factor focuses on elements such as Employment laws, Consumer
protection laws, Copyright and Patent laws, and Health and Safety laws of the country
(Banham, 2010). The Chinese government lays adequate attention to safeguard the property
and patent rights of business enterprises. The government has developed several laws for the
protection of customers. It includes Consumer’s Rights and Interest Protection Law, and
Product Quality Law and Food safety law. The Chinese government bodies also regulate
these laws. In the year 2013, the government has also revised the consumer’s laws. Through
this, it has strengthened the Chinese customer protection from business enterprise (Taylor,
2014).
The company will not face issue based on protection imitation because the government
safeguard the property rights of the company. The government lays high emphasis in the
protection of consumer laws. Therefore, it can be stated that China offers fine legal business
environment to the company.
Economic Factor: It mainly empathizes on level of economic growth prevailing in the
country. It considers Population strength, Unemployment rate, Inflation rate, Gross Domestic
Product, Per Capita Income, Disposable Income and Interest rate (Banham, 2010). Globally,
China ranks first for its high population strength. It has a population of 1.4 billion. The GDP
of the country is 6.6% with a growth rate of 6.9%. The unemployment level is mere 4.7%.
Additionally, inflation rate is marked to 1.6% (Heritage, 2019).
The high population strength will benefit the company. It will provide an access to high
number of potential customers. The rising GDP states that China provides fine economic
growth. The fine PCI income states that people have reasonable disposable income and fine
purchasing power. Low unemployment rate in the country depicts that high population of the

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country is employment. This means that they have adequate financial resources to opt for the
product of the company. Additionally, the low inflation rate states that the company will not
face issue due to instability in economy. From analysing the economic factors of China, it is
acknowledged that it provides excellent economic environment to the company.
Informal
Social and Cultural Factor: It takes into account factors such as customer’s buying
behaviour, trends, lifestyle, and health consciousness, and buying habits (Banham, 2010).
Based on the buying behaviour, it is acknowledged that Chinese are sensitive to the price.
They are highly conscious about the brand. They show low level of trust on business
enterprises (Zhu, 2013). They do not develop the use of social media websites for purchasing
a commodity. Instead, they rely on official website of the brand to opt for a product. It is
assessed that two third of the population prefer physical stores for making a purchase. They
lay high attention towards the product quality and uniqueness. They show high level of brand
loyalty (Zheng, 2017).
As per the Chinese culture, a higher attention is given to the family and group. Therefore,
family relationships are highly significant among the Chinese. The Chinese mainly relies on
non-verbal communication style. Their high degree of brand loyalty will benefit in
developing loyal customer base in China (Zheng, 2017). The high level of price sensitivity
among Chinese will not be favourable for the company. This is because it will face issue in
selling its product at high price. Therefore, it states that China provides passable social and
cultural environment to the company.
Internal Business Environment
The internal business environment is composed of many elements present inside the
organization. All these elements lay an impact on the organization and its process. It includes
organizational structure, corporate culture, physical resources human resource and
technology capabilities (Claudiu et al., 2011).
Resource based view
This model is used to determine the resources of an organization to gain a sustainable
competitive advantage. As per this model, resources are divided into two categories named
‘Tangible’ and ‘Intangible’. These resources are further divided into Heterogeneous and
Immobile (Darcy et al., 2014).

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Tangible Resources: These are the resources that can be seen and touched. It includes
Human Resource, Fixed Asset, and Financial resources. Potato Corner has an access to all
these resources. It has high employee strength because it has employee in around 500
branches (Potatocorner, 2019). It is a profitable business enterprise. Therefore, it has fine
amount of financial resources. Additionally, the company also owns land and building to
conduct business operations.
Intangible Resources: Resources that cannot be touched but only felt are considered as
Intangible resources. It includes Goodwill, reputation and patent. They are not touched but
they offer high advantage to the company. Potato Corner has high goodwill and brand
reputation in the global market. This is because it is offering services since 1992
(Potatocorner, 2019). The company has offered quality product with reasonable price to its
customers. It has allowed the company to develop and maintain its goodwill in the market. In
order to safeguard its product from imitation, the company owns patent rights as well.
VRIO Analysis
VRIO is an acronym for Valuable, Rare, Inimitable and Organized. It is a framework to
evaluate the resources of an organization and competitive advantage. This model forms the
part of Resource view model. A resource is considered valuable when it offers advantage to
the company. It is considered rare when only few business enterprises have an access to that
particular resource. It is inimitable when the cost of imitating that resource is highly
expensive (Knott, 2015). It is considered organized when the organization is able to develop
its full potential usage. Below is the VRIO analysis of key resources of Potato Corner.
Human Resource: These are the employee of the organization. They are considered as an
asset for the organization because they assist the company in achieving its organizational
objectives (Knott, 2015). Potato Corner’s human resource is valuable because it helps the
company in delivering quality product to the customer. They are rare because no group of
employees attain all similar skills and qualities. It is inimitable because it attains highly
skilled and loyal employees. They are organized because the company is availing the possible
outcome from its human resource. Therefore, its Human resource offers sustainable
competitive advantage to the company.
Fixed asset: These are highly essential for conducting the business operations. These include
land, building, inventory and machineries. These resources allow the company to fulfil the
need of the end users. The fixed asset of the company is valuable because it assist the

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company in conducting business operations (Knott, 2015). Potato Corner’s fixed asset is not
rare because major companies have an access to fixed assets differing in size and value.
Therefore, it offers competitive parity.
Financial resources: It acts as resource because it enables the company to carry out its
business transactions (Knott, 2015). It is valuable because it allows the company to purchase
raw material, pay salaries to employees and perform other operations. However, it is not rare
because majority of business enterprise have this resource.
Goodwill: It depicts the value of the company in the market. It is intangible but it attains a
high significance in the market (Knott, 2015). It took multiple years of the company to build
and maintain its goodwill in the market. It is valuable because it help the company in gaining
the trust of other parties (customers, suppliers, shareholders and creditors). It is rare because
only few companies (like McDonald and Pizza hut) have goodwill in the market. It is
inimitable because it is hard to earn. It is organized because the company availing its best
possible use to enter the foreign market.
Competencies
Competency is the knowledge and skills that makes the company distinct from its
competitors.
1. Research and development: Potato Corner develops the use of market research to
open its more stores in global market.
2. Brand management: It develops the use of other people’s money to grow its business.
It uses their financial resources to open its franchisee in global world (Businessnews,
2017).
3. Satisfied Human resource: The Company has achieved high number of positive
reviews and a rating of four stars from its employees. Therefore, its satisfied
workforce enables the company to achieve better outcome (Indeed, 2019).
4. Unique product: The company offers flavoured French fries to the customer of global
world. It assists the company in gaining a distinct position in the customer’s
perspective.

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Entry Strategy
A business organization relies on market entry strategy to establish business in another
country. There are multiple forms of market entry strategies. It includes Joint Venture,
Licensing, Franchising, Direct export, Foreign Direct Investment, Partnership and
Acquisition. Each strategy has its own pros and cons. It provides an advantage to the
company to enter in the foreign market. However, these do not guarantee revenues in
international business market (Alexander et al., 2010).
Licensing
Licensing market entry strategy involves granting permission from another company to
develop the use of its intellectual property. Brand name, copyrights, trade mark, technology,
and patent forms the part of intellectual property. It offers low risk to the business enterprise.
The company has to invest less financial resources in gaining a business opportunity
contrasting single ownership. It allows the company to gain renowned brand name. It allows
the company to easily enter the foreign market. It develops dependency on licensor. License
is offered for a specific period of time. Failure in business leads to the reduction in reputation
of both the parties (Gaille, 2018).
Joint Venture
It is a form of business arrangement in which two and more parties share their resources with
an aim of achieving a specific task. The task might be a new project or business activity. In
Joint venture, the parties experienced shared ownership, expenses, investment, risk and
financial return. A separate brand name is chosen for the venture. It offers various advantages
to the company. It allows the company to easily achieve economies of scale. It helps the
company in gaining the potential to grow and develop. It develops the possibility of
innovation in business services. Additionally, it provides the advantage of ‘low cost of
production’. Separate brand name benefits the company in gaining distinct identity. Its
demerits include hardship from exiting the joint venture contract. It often gave rise to
imbalance in assets and investment. It develops the possibility of clashes among the parties
(Thebalance, 2019).
Foreign Direct Investment
FDI is an investment by an individual/company in another country. It offers multiple
advantages to the company. It helps the company in gaining access to the market. It helps the
company in acquiring a control over the resources of the country. Additionally, it also

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develops the chances of gaining cheap labour market. It allows the company to have access to
better technology, and expertise. It develops the possibility of better productivity. It is an
expensive investment. Therefore, it will incur high cost of the company. The company may
face problems and risk from change in political environment (Kuepper, 2019).
Appropriate Strategy
Opting for a right market entry strategy is highly essential for effective functioning of the
business in the host country. Potato Corner should develop the use ‘Foreign Direct
Investment’ for entering the Chinese market.
Justification
Developing the use of Foreign Direct Investment will be best suitable for the Potato Corner
Company. Following are the reasons for choosing FDI market entry strategy:
1. FDI will allow the company to take the ownership of its company.
2. It is a reputed and recognized business enterprise with more than 800 stores in global
market (Potatocorner, 2019). Therefore, it will not face issue in gaining the trust of
Chinese customers.
3. The company avail financial returns from more than 100 countries including United
States and Thailand (Galang, 2019). Therefore, it will not face issues in investing sum
for FDI in China.
4. With single ownership, the company will not have to share its profits. Additionally, it
will not face the possibility of disputes.
5. It will make the company more dependent and informed about business operations.
Implementation
Initially, Potato corner should develop the use of profit reserve for investing in Chinese
market. It should seek appropriate location for opening its store. Potato Corner should rely on
market research. It will help the company in gaining significant information about the market
conditions. It should rely on professional adviser from China. Adopting this step will help the
company in gaining fruitful information about the Chinese market.

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Timeline
The below timeline will assist the Potato Corner in successful implementation of Market
entry strategy. Potato Corner should strictly adhere to the timeline for entering its footprints
in Chinese market.
ACTIVITIES TIME FRAME
Market Research January 1, 2020 to January 31, 2020
Availing Resource February 1, 2020 to February 10, 2020
Planning February 10, 2020 to February 28, 2020
Allocation of Resources March 1, 2020 to April 1, 2020
Strategy implementation April 2, 2020 to May 2, 2020
Controlling May 2, 2020 to till process
Key process
1. Potato Corner should gather key information about the trade barriers prevailing in the
country. It will assist the company in deciding that weather the chosen market entry
strategy is appropriate or not.
2. Potato Corner should develop connection with the distributors and agents of the host
country. This will benefit the company in easily connecting with its potential
customer.
3. It should conduct an industry research of fast food industry of China. It should lay
higher attention in determining industry rivalry, customer power, and supplier’s
power, threat of new entrant and threat of substitution.
4. The company should conduct SWOT analysis based on Chinese market. It will allow
the company in availing crucial information about strengths, weakness, opportunity
and threats. This will benefit the company in undertaking measures for eradicating
threats and availing the full benefit of opportunities (Yuan, 2013).
Organizational Structure
There are multiple types of organizational structure. It mainly includes Hierarchical,
Divisional and Matrix. Potato Corner should develop the use of Hierarchal organizational
Structure. This is because high power distance prevails in the country (Hofstedeinsight,
2019). Opting for this organizational structure will allow the company to align with cultural
dimension of the country. It will help the company in developing defined structure of

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communication in the organization. Additionally, it will give rise to positive formal relation
in the company.
Human Resource Management
HRM allows the company to effectively manage the performance of the employees.
1. In order to give rise to satisfied employees, the company should develop the use of
incentives for motivating the Chinese employees. It will develop a driving force
among the employees to perform better.
2. Individualism is low in China (Hofstedeinsight, 2019). This clearly states that Chinese
focus in availing group benefits. Therefore, the company should offer rewards based
on group benefits. Example: Family tour
3. Potato corner should develop fun activities in the organization. It will allow the
company in developing better interpersonal relation among the employees. In the
presence of positive working relationship, company will find an ease in developing
satisfied employees.
Conclusions
The report summarizes the concept of Global Business. It is assessed that offering business
services at a global level offers multiple advantages to the company. It assists the company in
gaining high strength of customers. It allows the company to become globally recognized. It
is analyzed that China provides fine economic, legal, social environment to Potato Corner. It
is evaluated that its human resource and goodwill offers sustainable competitive advantage to
the company. It is realized that Licensing, Joint Venture and Foreign Direct Investment. It is
evaluated that developing the use of Direct Investment will be best suitable for the company.
This will benefit the company in gaining complete ownership, profit and eradicates the
possibility of business conflicts. For the effective implementation of strategy, it is realized
that the company should opt for hierarchical structure, HRM, SWOT, Competitor analysis
and develop harmonious relation with key supplies from China. Hence, it concludes that
developing the use of FDI in China will yield fruitful result for Potato Corner.

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