Report on the International Business Strategy of Bank of China

This report provides a comprehensive analysis of the international business strategy of the Bank of China (BOC). It examines the bank's corporate strategies, emphasizing its focus on corporate banking, diversification, and expansion of financial services. The report delves into the implications of formal and informal institutions on BOC's market entry strategies, highlighting their roles in supporting market mechanisms. It explores different market entry strategies, with a specific focus on joint ventures, and discusses their advantages and disadvantages. The report also offers recommendations to the CEO of BOC regarding market entry strategies and concludes by summarizing the key findings and emphasizing the importance of strategic planning for international expansion, particularly in the context of entering the US market.

International business strategy
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Table of Contents
Introduction.....................................................................................................3
Corporate strategies of Bank of China............................................................3
Implications of formal and informal institutions............................................5
Different market entry strategies of Bank of China........................................6
Advantages and Disadvantages of market entry strategies.............................7
Recommendations to CEO of Bank-of-china about market entry strategy....8
Conclusion......................................................................................................8
References.......................................................................................................9
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Introduction
International business is defined as a business entity that engages in
international economic activities and that conducts business functions with all
those businesses that do business in abroad. Most of the business entities in current
scenario have been emphasizing towards globalization so that the scope of business
can be encouraged (Lowe and Doole, 1997). The design of international business
strategy cannot be separated from the external macro level context in which it
operates. The present research study has been made on Bank of China which is
engaged in the provision of banking and other financial services such as
commercial and investment banking, insurance and other investment services. As
per the market analysis, it has been observed that the company operates its business
through various segments such as corporate banking, personal banking, treasury
operations, insurance services and investment banking services. There are wide
range of financial services which Bank of China has been delivering to the clients
as per their specific needs and demands (Menen, 2010).
Corporate strategies of Bank of China
The corporate strategy of subsequent bank includes offering adequate
services to the corporate customers, providing diversified authorities to the
government body, managing trade related products and so on. Bank of China
ensures that they are giving proper credit services to the clients.
On the other hand, corporate strategies of Bank of China include earning
more foreign currency so that the value of domestic currency and country's
economic state can be enhanced and improved. Similar to other banks, Bank of
China also provides deposits and other overdraft facilities to the customers so that
they can manage their financial aspects in an adequate manner. The bank has been
trying to include several things in the service provision where in chief emphasis
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has been given towards diversification and expansion aspects. The treasury
operations segment of the bank deals in foreign exchange transactions, it also
increases customer based interest rate; thus as a result, overall capability of the
earnings can be enhanced (Bank of China well positioned for continued overseas
expansion, 2015). At the same time, the investment banking segment includes debt
and equity underwriting and financial advisory which augments financial capability
of the bank. It has also been observed that the Bank of China specializes in
underwriting general and life insurance business services so that safety can be
delivered to people. Other segment of the bank comprises of investment holding
and other miscellaneous activities that aids in augmenting the financial capability
of the bank. To expand the services, Bank of China has been focusing on different
market entry strategies.
Bank of China seems to be highly emphasized towards corporate banking
because that is the chief source of acquiring long term profits and revenue. The
bank focuses on such thing so that collaboration with different successful entities
can be made. The main aim of emphasizing on corporate banking is to increase
long term partnership with major business customers (Lynch, 2006). Hence, in such
respect, the bank defines business with small and medium sized enterprises because
that is a crucial part of corporate banking business. This is highly committed to
excellence and it also aids the entity to become efficient and professional partner
which satisfies various needs of small medium enterprises. Bank of China
(considered as the fourth biggest lender that provides better financial services to the
clients) has been planning to set up more US branches by selling asset and
securities (Verbeke, 2013). The planning has been made this year in terms of
facilitating cross border investment amid the two countries. Currently, Bank of
China has its branches in New York, Los Angeles and Chicago and in order to look
more forward, the bank has been planning to establish the business in Panama
(South America) (Bank of China, 2015). However, the expansion plan has to
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overcome stringent US regulations which are made for foreign banks.
Apparently, when Bank of China has made a decision to enter an overseas
market, it looks for more business growth and success. From several resources, it
has been found out that with a unique and comprehensive financial platform, Bank
of China offers commercial banking, investment banking, insurance services, asset
management, aircraft leasing and other financial services so that complex demands
of different customers can be fulfilled. Hence, to enter in new market place, Bank
of China can emphasize on market entry strategies because that is the planned
method of delivering services to a new target market and distributing them to
different customers (Lowe and Doole, 1997). Hence, in such respect, Bank of
China can acquire assistance from formal and informal institutions that delivers
financial help from diversified contexts. This is also another source of finance
through which Bank of China can acquire assistance to operate business properly in
new target areas. Many companies successfully operate in a niche market without
changing the market segment and it happens due to formal and informal institutions
(Peng, Wang and Jiang, 2008).
Implications of formal and informal institutions
Formal and informal institutions have an essential role in a market
economy to support the effective functioning of market mechanisms. This assists
the firms to engage in market transactions without incurring undue expenses on
costs or risks. These institutions generally include the legal framework and its
enforcement on business practices and along with the same, it also includes
regulatory regimes. The institutions are strong in developed economies, their roles
and contributions are almost hidden and invisible (Lynch, 2006). However, in
contrast to this, when any market does not work in proper way in some emerging
economies, the overall facets of the economy gets suffered.
Hence, institutions can provide positive and negative impacts on market
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entry strategies in which the Bank of China will be able to conduct all the functions
in new American market properly. Concluding the entire research study, it can be
said that China is not a single market; but its province is different; therefore the
market can grow in the same way if comes in collaboration with other entities.
From the research study, it is also evaluated that the significant growth of overseas
investments really started to develop strengths of banks and other institutions in the
year 2002 as China opened up and joined the World Trade Organization. This
depicts the opportunities of more growth and success. On the other hand, the
impact was swift because Chinese companies grew quickly as they capitalized on
new found knowledge and they have also invested their reserves and leveraged
funds in different activities (Menen, 2010).
Different market entry strategies of Bank of China
It is beneficial for the organization to effectively identify various strategies
to enter into a new market to render the services and sell out the product to the
different groups of people. In order to make the entry it is essential that the
organization does a proper evaluation of the strategies to target the customers into
the new market (Benito, 2005). There are various common strategies which can be
adopted by the organization to outsource their product and services into the market
which is entirely different from the previous one.
In order to make the entry into the market of Panama, Bank of China can
adopt the joint venture strategy to start up their functioning within its geographical
boundaries. All the aspect is considered for the purpose to meet up the requirement
of the customer to whom they are targeting (Open for business: The incredible
expansion of Chinese banks, 2013). This will be beneficial for Bank of China as
the entry would be made in an easier manner. With the help of this strategy, Bank
of China clearly identifies the market effectively as the market of the joint venture
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company is identified beforehand. Thus, demand forecasting is being done over
their hand as it helps each other to expand within the geographical boundaries of
US. The joint venture strategy will help Bank of China to assess the internal
aspects through which valuable services will be offered to the customers as the
market is new for them. Through this strategy, the respective operations are
determined which will help Bank of China to develop the business plan as
respective options need to be exercised upon to make the entry into US market at
Washington DC (Stonehouse and Houston, 2013).
Beside this, all the segments are equally distributed and managed properly
to make the entry and cater the ample customer groups. This strategy will help
Bank of China to sequentially handle the entire operations in an effective manner
to make the entry (Levy and Newell, 2002).
Advantages and Disadvantages of market entry strategies
Market entry strategies are useful because that aids the business entities to
enhance the market share along with global strategic positions. Collaborative
agreements can also be undertaken through the same and the ratio of investment
should be increased at the same time (Hill and Jain, 2000). Further, bank of China
should also emphasize on outright acquisitions so that shares and equities of
different business entities can be acquired. However, on the other hand, joint
venture involves foreign operations as it involves facilities with foreign partners.
Controlling actions are also limited which also limits the potential of profits and as
a consequence, it dilutes the entire operations of management. It can create
fiercible competition in the market place (Matsuno and Mentzer, 2000).
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Recommendations to CEO of Bank-of-china about market
entry strategy
The joint venture strategy helps Bank of China to make an easy entry into
the market of US. The market to make the offering is already identified previously
by the venture with whom Bank of China is joining to carry out the entire
operations and make the offering (The Impact of Formal Institutions on Global
Strategy in Developed vs. Emerging Economies, 2012). All the information is
available before hand as the business entity is already established and catering
large number of customers. This strategy helped Bank of China to establish
effective contracts with the customers and the clients to make the offering of
product and services.
Conclusion
Summing up the entire case, it can be said that Bank of China has to
emphasize on joint venture strategy so that assistance can be acquired from the
successful entities who already operates business in the same market place. Bank
of China should successfully enter into diverse market places with numerous
entities as that will also allow the bank to share risks and other revenues. At the
same time, it is also useful in terms of providing success opportunities to learn new
environment.
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References
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