Foreign Markets Entry Decision for a Chinese Firm - Case Study

Evaluation of Entry Options

Read the following case study and answer to the following questions. It is important for you to read the assigned chapters for the module carefully before attempting to answer the assignment. The learning from reading the text must be reflected in your answers.

 

Grading criteria for case studies are listed under "course information." Case Study # 4:

 

Foreign Markets Entry Decision for a Chinese Firm While traveling to China on a vacation, you meet Ms. Jenny Chang, A Chinese business executive, in the plane. She is happy to learn that you are the international business development consultant for a multinational company.

 

She becomes interested in your expertise and asks you to work as her company's consultant for a project involving new business development in Turkey.

 

Her company has just invented a revolutionary new CAD system for designing and weaving wool carpets that can improve the design and manufacturing productivity significantly. Several patents protect the unique design of this technological system. The CEO has asked you to formulate a recommendation for how to expand into Turkey. Your choices are: 

(i) To export to Turkey from the manufacturing plant in China,

(ii) To license a Turkish firm to manufacture and market the computer system in Turkey and elsewhere, and

(iii) To set up a wholly owned subsidiary in Turkey. Select the best of the three choices for Ms. Chang. Support your recommendation by first evaluating the pros and cons of each alternative for Chang's company.

 

This assignment is analytical in nature. You are expected to demonstrate your ability to convert your theoretical understanding of the modes of international business entry into practical applications. Therefore, I would hope that you will relate all of your answers to the situation in the case or the scene presented and not provide generic text book answers.

 

Some factors that must be kept in mind to analyze the situation and make your recommendations look practical to your client. As a consultant, you can make some assumptions about the different aspects,Such as: What is the nature of the product: brand new high technology consisting of a computerized CAD system.

 

The CAD system that this company wants to promote in Turkey consists of two major parts: the hardware which is a sophisticated weaving machine, and the software that designs the carpets and runs the weaving machine.

 

How important is it to protect patents and the technology from being copied illegally?

 

How important is the firm's intellectual property? How do transportation costs affect your decision?

 

Where is it being manufactured now: China. What is the level of manufacturing sophistication in this country when compared with the target country?

 

What is the nature of the target market: What are the relative business barriers in the two countries? Demand? Economic development?

 

Legal system for resolving disputes? Patent protection laws or enforcement of the law? Availability of skilled engineers and workers?

 

Availability of suitable agents or partners? The consideration of the above factors will allow you to produce an excellent report for Ms. Chang. Doingbusiness.org is a great source to find relevant facts about China and Turkey for this case study.

 

Instructions:

 

Prepare your responses in no more than 4 type written pages 4 type written pages (in APA Format).

 

There is no need to write too much. Try to stick to the points. Conduct a spelling check carefully before submitting your response. Write your name and assignment number at the top of the document.