Multinational Corporations in China: A Strategic Approach

Introduction

This chapter deals with the background of the study and the background of China Market and Strategies used by Multinationals Operating in the China or China Market. Then the statement of the problem, the purpose of the study, research questions, and research hypothesis are made. The contribution of this research, its limitations, the definition of terms, and the overall overview of the entire dissertation are represented.

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For over 1.5 billion people living in China, it offers an agog market for any company operating in any industry to enter into China. The economic stability and growth of China give an opportunity for any company with an intention of expanding the international Market to select the Chinese market first. There is a high population that provides cheap labor. The population also provides the market for goods and services.

The main issue of the study, in this case, is the strategic decision-making for multinationals entering or planning to enter the Chinese market. There has been a change of strategy in recent years about the analysis of the strategic position of a country. It is swift from analyzing the external environment to the internal environment. In this case for multinationals before entering into china market they carry out PESTEL (political, environmental, social, technological, economic & legal environment) analysis and SWOT (strength, weaknesses, opportunity, threat) analysis.

In the recent past, there is a recession in North American causing a lack of motivation for consumers to consume some goods and services. This fact is driving some companies to think of integrating and entering the Chinese market. The main question comes is the question of the entrance to the Chinese market. What strategies are used?

Any company wishing to enter the Chinese market must be able to analyze ethnocentricity. That is one must be able to understand the cultural beliefs ethics and social issues of the Chinese market before trying to market goods in the market. The social-cultural factors are very essential which cannot be ignored before entering the Chinese market. The major challenge for a company is to ensure that the belief of the people of china is not violated when marketing products.

The cultural activities of these people and desires, their likes, prevalence equips an individual of the community with certain values. E.g. when a company is marketing a product in China, the mode of advertisement and the statement made should not be a mere buff. Ethnocentricity has a great impact on the type of media to use in the communication of the product prevalence to a diverse group of people. There is also the use of the approach in marketing the product in a Chinese market especially if you want to succeed in the market. There is the adoption of porter s strategy and competitiveness that is cost leadership and product differentiation.

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In this thesis, we shall analyze five porters strategies, the generic strategies, cost drivers, cost reduction measures. Apart from the mentioned analysis, the thesis will deal with the economic and political conditions prevailing in China.

Entrance into the Chinese market for multinationals they consider the marketing potential and the ethnocentricity and the utilizing the pricing strategies also the marketing information system in order to obtain a sustainable market share of the Chinese market.

Whichever strategy multinationals use in entering into the Chinese market. the strategy must ensure profitability and corporate sustainability objectives are expected to be attained. However, of late some multinationals adopt strategies that have resulted in deterioration of financial performance at some point in the cycle of expansion. “This has been mostly associated with poor decisions by management for of expansion adapted or market erosion of the product. Based on a deterministic perspective this organizational decline can be attributed to environmental factors while the voluntaristic perspective attributes decline to internal factors, particularly management actions, and perceptions. Whether causality is attributed to external factors, internal factors, or both, managers can respond by selecting strategies that redirect resources in an attempt to improve their firm’s competitive position” Rasheed (2006).

Penrose, (1959); Ackoff, (1970); Hofer & Schendel, (1978); Hitt & Ireland, (1985); and Wernerfelt, (1984) in their works argued that organizations decline in performance is attributed to strategic decisions or reactions by management of corporations that seek growth through expansion. Most strategic decisions made by companies are related to growth, stability, or retrenchment strategies, which ultimately aim to increase profitability or reduce costs.

Research on growth strategies has considered a number of factors that influence the increase of profitability.” Among Asian firms, Tan and See (2004) suggested that strategic choice is a function of organizational slack, size, and management’s perception of external factors controllability. However, the effects of the degree of deterioration and limits to resource availability on strategic choices for small business owners have not been adequately addressed. The issue of decline is of particular interest for small businesses, given the exceptionally high mortality rate (Chowdhury and Lang, 1993). Previous small-business research has addressed certain elements of decline and failure, but has not been conclusive.” Writes Rasheed (2006

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Background of the Study

“Strategy or strategic management evolved from a number of sources including case studies and the discipline of economic theories. It evolved, as theoretical disciplines in response to the frustration of managers at the limited help the economic theories were able to give them in running their businesses. This was so because these theories operated on a very restricted set of assumptions that were unrealistic in many areas of actual business life. That is why in the past strategic management was the responsibility of senior executive officers that implement strategies in the companies based on lessons drawn from company’s case studies” complements Numfor& Ajang, (2007).

For the last ten years, we have seen a business re-organizational change where companies have to embrace new techniques, and this reorganization is likely to continue or even new strategies to come up. This realignment made organizations establish a relationship with suppliers and customers or even owning the supply chain. This has led to electronic commerce and change of marketing strategies, reducing cost through staff re-organization. “As strategies change and evolve in companies, it is increasingly becoming necessary to examine organizational issues in terms of implementation of marketing strategies.

As companies become stimulated to rethink how to organize the market to counter-performance shortfalls, better integration to globalize products and brands effectively in order to increase their market shares. Building market strategies in every organization underline the corresponding need to manage organizational strategies. So it is very important to make decisions regarding strategic management based on the conceptualization of specific situations” Numfor& Ajang, (2007).

I will be going through concepts and ideas of strategic decisions to help in understanding, how strategies are developed in organizations. I will also distinguish between the three concepts and ideas of my topic. I will also need to explain the process strategies decision-making. Strategies emerge or are developed for a specific purpose. In their thesis, Numfor& Ajang, (2007) observed the following relating to the development of strategies “The strategies developed by organizations are either intended or emergent and there is no one right way strategies can be developed.

This is so because strategy development differs over time and in different contexts, the preconceptions of how strategies develop are seen in different ways by different people and multiple processes through which strategies are developed in organizations. As a strategy, development/implementation and organizations quickly become less than perfect as the environment, competitors or strategic priorities change. As days went by, these theories were of limited help to managers in building profitable companies as an economist are inclined toward the admiration of perfect market.

In my opinion, the best way to understand, strategic management is through exploring case studies for multinationals operating in China to learn the strategies they have adopted and how they are implemented to assist multinational

Statement of the Problem

Making a decision for a multinational the entry mode or strategy into the Chinese market and which, growth strategy and which parts of the value chain to introduce in the Chinese market has become one of the most difficult decisions for boards and chief executives. The conventional analysis of PESTEL analysis has looked simply at the efficiency of the internal environment as compared to the efficiency of the external environment. if the cost of transacting through the market is greater than the cost of administering within the country, then the company should use strategic means to enter into the Chinese market.

Transaction cost analysis does not, however, provide the complete answer. In the first place, entry strategies are not enter or exit strategies—there are a wide variety of ways in which a company can structure itself in entering into china market. Secondly, the most critical long-run consideration is the development of organizational capability and profitability. If a company is to sustain a competitive advantage in China, it must restrict itself to those activities where it possesses capabilities that are superior to those of the other companies that perform those activities. The most difficult issues arise where there are linkages between entry mode and successive retention of the market share.

Ultimately, entry and survival decisions revolve around two key questions. First, which activities will we undertake internally and which activities to outsource while in the Chinese market. Second, how does the company design its entry arrangements with local suppliers and international suppliers and buyers? In the case of external relations, this is conducted through whether spot contracts, long-term contracts, or some form of strategic alliance. Similar ranges of alternatives face the vertically integrated firm—including the option of arms-length negotiated contracts. Both types of decisions are critically dependent on the firm’s competitive strategy and the capabilities it possesses. As it will be noted, the critical issue for the individual business is not to follow conventional wisdom but to carefully evaluate its strategic needs, its resources and capabilities at different stages at the value chain while in China, the characteristics of the transactions involved, and relative attractiveness of different stages of the business operations.

Purpose of the Study

The objective of this study is

  • to identify the strategic market types which are available for multinationals in China and how they are implemented
  • to identify entry strategies of multinational and how to keep a large market share
  • Assess the relative merits of mergers and acquit ions and market transactions in organizing entry related activities and understand the circumstances that influence their comparative advantages
  • Identify a range of possible relationships among multinationals related firms, including spot market transactions, long-term contracts, franchise agreements, and alliances
  • Identify scenarios of long-term sustainability in the Chinese market.
  • Explain why some types of entry-related activities are integrated within a single company operating in China, whereas others are performed by separate companies in the same market.
  • Identify the critical considerations pertinent to enter or exit decisions and the extent to which the Chinese market helped in the integration of local companies and multinationals
  • Develop a strategic approach that is most advantageous for multinationals operating in China.

To achieve these objectives the thesis will go through SWOT analysis and PESTEL analysis whereas the concept of strategic approach is in use.

The scope of the study

To understand the Chinese market, international business expansion, and diversification for multinationals, a comprehensive analysis is carried out to ascertain the various needs of expanding companies in the Chinese market. This thesis is basically on the strategic approach for multinationals operating in China, their mode of entry, their survival techniques, and exit strategies. In carrying out this thesis, certain constraints will inhibit effective study, firstly due to the short deadline period to finish this write, time factor will render certain aspects not to be researched in detail. Secondly, the study assumes that effective and efficient management and application of diversification and product differentiation are the determinant of performance and greater market position in China.

On the other hand, in economic reality, there are features that affect performance and market position such as Capital deployment, employee motivation, organizational structure, organization capacity, supply chain management, technology, ethnocentricity, government policy and laws, acceptance by the local communities and strategic alliances.. However, this study does not consider some of these factors. This study also assumes that all strategies applied by multinationals operating in china are geared towards market retention, expanding internal market expansion, and obtaining good market share the thesis assumes that they are ready to implement strategies that are stable and good for the multinational operating in china. Some of the multinationals are operating in china have good strategic management and have carried out strategic analysis and situations of the Chinese market and they are there to survive.

Significance/Importance of the Study

The thesis research will be of great value for future searchers, multinationals, investors, and educators intending to deal with the Chinese market and others because.

  • To highlight the important role that market growth strategies play in the company’s market share in China.
  • to highlights h growth strategies for multinationals in Chinese for the Chinese market and how these strategies affect multinationals’ market share.
  • To helps the management of multinationals in strategic decision-making.
    • It will assist Chinese citizens to understand the operations of multinationals in their market and how they will be able to enter other markets.

Research Questions

  • Which strategic market types implemented by multinationals operating in China and how have they developed them?
  • How vertical integration, geographical expansion, and product development do affect the market share of a multinational operating in china?
  • what are the advantages of each form of growth strategy in China?
  • What are possible relationships between multinationals and local companies?
  • What is the relationship between multinationals operating in china and human resources?
  • What growth strategy is favorable to multinationals operating in China?
  • What is in-house policy and what is it used for?
  • What is the relationship between human resources and multinationals?
  • What economic conditions favor multinationals in china today than other companies?
  • What is favorable among multinationals strategic alliances, take over’s, mergers, acquisitions

Research Hypothesis

The following hypothesis will guide the research:

  1. The multinational operating in china has financial resource that can use to adopt any strategy without straining.
  2. Multinationals in China have equal Chances of succeeding in the market as local companies.
  3. The board of directors is ready to enter or exit market without much opposition.
  4. Their products meet international standards and are acceptable in Chinese market.

Limitation of the Study

This research project is on a session of the entire Chinese project. In carrying out this project, certain constraints will inhibit effective study:

  1. Time factor will render certain aspects not to be investigated in details because of the deadline period to finish this thesis,
  2. The study assumes that effective and efficient management and application of growth strategies are the sole determinant of performance and greater market position. However, in economic reality, there are features that affect performance and market position such as Capital deployment, employee’s motivation, organizational structure, organization capacity, supply chain management and technology. This study does not consider these factors ( Numfor& Ajang,2007)
  3. My study also assumes that the many strategies that are applied by Multinationals and they are geared towards increasing market share and remain competitive.

Delimitation of the Study

The researcher is a student, he will be carrying out the research with the trust that managements will co-operate.

The research will be carried out by a full time student thus having enough time for coverage of the topic.

The researcher will access the data with easy because of internet search.

Definition of Terms

The terms that are in use in this thesis are defined in the context in which they are being used in this research and they are as follows:

  • Strategy: Strategy is the direction and scope of an organization over the long term, which achieves advantage in a changing environment through the configuration of resources and competencies with the aim of fulfilling stakeholders’ expectations.
  • Growth strategies: This refers to the power to capture growth in terms of turnover, expansion as well as recuperation of market share.
  • Market share: This refers to the total sales of a company divided by the total sales of other firms for a specified product –market. It may be calculated on the basis of actual sales or forecast sales.
  • Intended strategy: This is an expression of desired strategic direction deliberately formulated or planned by managers.
  • Emergent strategy: Emergent strategy is a strategy developed through everyday routines, activities and process in organizations.
  • Multinational company: Is a company that has branches in more than one country. In order for most these companies to set up branches in other countries, enables them to go global or international. The three words are interchanged in this study, as there is not clear-cut demarcation between them when referring to this company.

Relevant Literature Review

Overview of the Topic

This is literature review of the teacher qualification, leadership skills, standards consolidate of information from various literature written by different groups. There are two basic theories that have dominated management of organizations failures. At deterministic and voluntaristic theories. Deterministic perspective suggests that managers are constrained by environmental factors therefore; they have little choice in strategic management. 1. Voluntaristic perspective deals with organizational physiology. It suggests that manager’s actions and perceptions are important to organization failures. (Mullah & Wilkinson, 2004).

Looking at Cameron, Sutton and Whetten, we find that organizational failures are too fold. They argue that organization decline occur when they try to adopt their core business objectives. The actor stage in failure is in the stage of human resources and financial resources when they begin to diminish or their misuse. We can conclude that the two stages brought by Mullahi & Wilkinson we can say that an organizations failure is due to adoption to micro niche objectives and being unable to successfully exchange it is out put for new input vise versa.

Weitzel & Honsson (1989) also argued that the decline of the organization is due to environmental factors. They suggested that organization start failing when they fail to anticipate, reorganize, avoid, neutralize or attacked external pressures and take up internal opportunities that threaten organization survival. This argument puts an organization in an awkward position if they do not take proper SWOT analysis and PESTLE analysis. Researchers, academicians and business executives have argued that in order that an organization to have turned around strategies to match the pressures they must become competitive.

During growth faces, organizations try to adopt competitive strategies, which are positive for organization growth. Competitive strategies include, cost differentiation, product differentiation, vertical integration, geographical expansion and retrenchment. If an organization adopts competitive strategy they will face negative growth, produce obstruct product or failure to respond to market demand. According to the theory of disequilibrium and chaos organizations start failing when the founders fail to introduce innovation but they will continue to succeed when they introduce innovation.

Collection of theories and secondary sources

The researcher will use books available in the university in collection the literature. The computer la will pay an important role in access other scholarly written articles. Therefore, the process of gathering articles and other forms of literature will be done primarily the frequent use university facilities. Research on internet was done through a funnel manner by using key words highly qualified teacher. In addition, the government and state documents have been used extensively as supplementary source during the search of information.

What is a multinational company?

A multinational company is one that “owns outputs of goods or services originating in more than one country” and this is the simplest definition for such a company. There are other many ways that can be used to identify a company as a multinational company but the most commonly used alternatives of definition are four and they include operating, structural, performance and behavioral criterion. According to these four definitions, a multinational company can be seen as

In operational aspects as a firm or company that owns or controls income-generating assets in more than one country, that is the ownership-threshold definition. (Numfor N. and Ajang P.E. ;2007).

According to the structural definition, a multinational company is judged according to the organization of the company structurally at an international level (that is the structures are built up of separate divisions in different geographical areas). In regards to performance terms of definition, it incorporates some relative or absolute measures of international spread, for instance the number of foreign subsidiaries or percentage of sales accounted for by foreign sales.

Behavioral definitional aspects are based on the corporation’s degree of egocentricity. All these ways of defining a multinational company are very important as each perspective adds more understanding to what a multinational company is. No matter the criterion on which multinational companies are defined, they play a staring role in the current process of globalization. Due to this we can consider multinational companies as global or international companies, as a global company is one in which its competitive position in one country is significantly affected by its position in other countries and multinational companies also face this.

This can be seen through globalization of markets and these can seen as some of the factors that motivates companies to go multinational. This is so because markets now our days tend to be globally integrated. Further more what drives these companies global other than market aspects are globalization of government polices; cost globalization and globalization of competition and these factors also affect multinational companies if they place a role in globalization ( Numfor N. and Ajang P.E. 2007).

For these multinational companies to survive and growth, they need to implement some strategies in order for them to achieve their goals and objectives. Some authors identified the reasons for Multinational to go abroad or global is to gain access to host-country markets or to exploit international factors-cost differences. This means that when factor prices differ across countries, firms become multinational by locating production in countries where manual-labor cost are low and headquarters in countries where skilled-labor cost are low.

The concept of strategy

Strategy is “the direction and scope of an organization over a long period of time, which achieves advantage in a changing environment through its configuration of resources and competencies with the aim of fulfilling stakeholder expectations”. From this definition, strategies are complex, uncertain, affect operational decisions and require an integrated approach and change. Complexities in strategies are in the way of defining features of strategies and strategic decisions, for instance a multinational company may face complexity in the organization of its wide geographical scope. This complexity makes the definition of strategy context dependent and this supported by Mintzberg “five Ps” of strategy that includes strategy as a plan, ploy, pattern, and position. These “Five Ps” explain the various perspectives in which strategies are view in this context.

The five Ps of strategy

Strategy as a plan is a consciously intended course of action, a guideline to deal with situations. For example, strategy as a plan in management is a unified, comprehensive and an integrated plan designed to ensure that the basic objectives of the company are achieved. In order to use a strategy to achieve a company’s objectives, a ploy is required to achieve the said objectives. For instance a multinational company wants to expand its market in another country in order to prevent the threat of competitors’ entry that market. So the real strategy as plan is the threat of entry and the strategy as a ploy is the expansion of the market.

Viewing strategy as a plan or as a ploy illustrates that a strategy can be either general or specific. These perspectives of explaining what strategy is means that strategies are intended, of which they are not only intended but also emergent. Therefore, there are another ways in which strategies can be defined. Strategy as a pattern is as a stream of action, that is a consistent behavior in which things are done in an organization and this consistency in behavior can be intended or not.

This perspective indicates that strategy can also be emergent. Furthermore, strategy can be seen as a position, which is a means of locating a company with its environment. This means that referring to this perspective, strategies are used as a mediating force between the company (internal context) and the environment (external context). Strategy as position aims at matching the internal to the external, but strategy as perspective concerns the internal context of an organization. That is how members in the organization share their perspectives to other organizational member through their intentions or actions.

From the various definitions above, strategies do have the similar characteristics such as, every strategy is an invention, a figment of someone’s imagination, whether conceived as intentions to regulate behaviors before it takes place or inferred as patterns to describe behaviors that has already occurred”. Having this in mind, it will be appropriate to identify the types of strategies implemented by multinational companies. (Numfor N. and Ajang P.E. 2007).

The market share

Market share by definition refers to company sales divided by the total sales of all firms for a specified product in a given market over a given time period. It can be calculated on basis of actual sales or forecasted sales. In this study, we looked at market share from the “Marketing concept” which defines the marketing management philosophy, which holds that achieving organizational goals depends on determining the needs, and wants of target and delivering the desired satisfaction more effectively and efficiently than competitors (Numfor N. and Ajang P.E. 2007).

One of the ways in which success of any strategy implemented in any company can easily be identified from it profits and market share. In this study we will concentrate more on the market share/turnover to assess the efficiency of strategies adopted by multinational companies, as “the ultimate test to assess whether multinational companies are global themselves in their actual penetration level of markets across the globe”. This level of market penetration across the globe can be seen in terms of market share, and the Boston consulting Group (BCG) matrix is appropriate for our use.

The BCG matrix

The BCG matrix indicates the balance of a portfolio of a business in terms of relationship between market share and market growth The context of which this BCG matrix is used has excluded the idea of balance of matrix and only considers the relationship between the market share and market growth

As market growth rate is important for a business or company seeking to dominate the market, it is appropriate for that company to be a star. This is explained by the idea that higher profit levels often come from product or business with high market share in more stable markets.

It is worth noting that an in-depth review of all the different theories mentioned above, is beyond the scope of this thesis. However, the perspective of market growth strategies of multinational companies will provide the main support and serve as a foundation for the research reported in this thesis specifically as this thesis intends to use them to assess the strategies adopted by multinational companies towards market growth. The original business and corporate level strategy theory will be looked at in more detail hereof as explained in the figure below.( Numfor N. and Ajang P.E. 2007).

Reaching a required market share in china

China has the largest population unlike other countries of the world. This growth rate in population is accompanied by the growth in the economy which is supported by the democracy prevailing in the country.. In order for a multinational to be able to succeed in operations in china, there is need for the company to have good strategic position that will enable them reach the required growth rate. This will need strategic positioning through analyzing the market position and this will be possible by adopting the five P’s which includes strategies as a plan, ploy, pattern and position.

A plan is an intended course of action that guides companies on how to deal with situations. A strategy as a plan will assist the company to unify and integrate the company’s plan that is designed to ensure that the objectives of the company are obtained. In order for the company to attain their objectives, they must have a ploy. The ploy should assist them prevent other companies from entering the market. This is possibly through the use of cost reduction strategies through hiring the local population at a lower cost, using the local materials and marketing the product within the country using strategic alliances.

The company should also consider mergers and acquisitions to small competitors who are likely to cause a problem in the production and distribution of the company’s products. It is not a secret that India has many companies operating and these companies need or half part of the market and to get this market one must enter strategic alliances with them, buy them or drive them out of business through cost reduction. This will enable the company operating in India to have a 25% of the market share.

This will be possible in the market of India since the population is growing drastically and ht economy is doing very well. The data obtained from companies operating in the Indian market shows how the performance of these companies. The production within the country which is cheaper making the mobile phones low priced but with high quality increases the market share also. Since the multinational will have enough capital that will be used in the production of mobile phones required in the Indian market, they will only have to deal with competition which can be handled by the use of strategic alliances, cost reduction strategies, product differentiation and market positioning. This will lead the company to greater heights in productivity and marketing of their products,

Criteria

In exploring the market share in china, it is necessary to have in depth analysis of the market driving forces to some degree of truth and validate them. In order to ascertain the market share one needs to understand the economic performance of the Indian economy, the economic purchasing power of the people of India, the measures use in achieving the variables for measuring the market share and the population growth of the country. This will need the analysis of internal and external variables of the market. The company will need to carry out analysis of the factors which they can control and eliminate with certainty in order to succeed in the Chinese market.

Evaluate of Alternative

Analysis of International marketing opportunity

There are very many challenges that befall companies that want to expand and more to work internationally. Companies have to make very important decisions before they begin to offer their goods and services in the global market place. They will also face various challenges that require vital decision making. Moreover, they will need to make some adjustments or changes in order to fit into the new country where they wish to operate. A company has to decide carefully on which country to enter and how to enter each country. The country has various ways in which it can begin business in a foreign country.

The first way is by beginning as an exporter of its products to a new country. It can begin joint ventures, solicit contracts, or decide to enter as a solo company (Wheelen & Hunger, 2007). All these ways pose serious challenges that the company has to overcome in order to survive. The company has also a challenge of ensuring that customers will adapt to its products easily and the pricing methods they will use to attract customers. Other challenges that will face the company include political legal systems of foreign countries, different negotiation styles of people who have different consumer buying behaviors, good or poor political climate, and strength of the currency of foreign countries. Some of the major challenges that the company will face will be political factors and social cultural factors. Other factors are technological, economic and demographic (Bartlett, 2004).

Political factors will affect the company due to adjusting and fitting into the political situation of the foreign country. Some of the political barriers will be governments which have bad officials who award businesses with corruption to highest bribers. Other governments will impose high tariffs to protect their home industries. Poor political environment will force the countries to place many regulations on the entering country to scare it off (Hyde, n.d.).

Political environment is also inclusive of laws, government agencies and pressure groups that will form a barrier to entry into a particular country. There is however hope because some political factors can also create some opportunity to countries (Bartlett, 2004). Therefore, the company must know all the major laws protecting competition, consumers and the society of the country that it wants to enter, before they decide to expand into the country.

Social cultural factors will also greatly affect the company in its bid to expand to the international market. The company should have products that will match the preferences of the foreign country’s citizens. Most people have different behaviors of buying goods in different countries. Some of the cultural factors that will affect the way people will perceive the company’s products in a foreign country include the cultural factors like, social classes, cultures and subcultures of the people.

Other social factors include groups, families and different roles that people have in their families (Taylor, 2000). The company can expand into a country where people may hold strong many core beliefs and values that tend to persist, and this will affect the demand for the company’s products. The company should understand the people’s view of measures and other societies to make products that correspond to the needs of the international values and standards and solve the needs of the international community.

Other factors to consider are the economic factors of the new country. How the people spend their money, their power to purchase products and the income distribution among the people in the foreign country. Some people also have different patterns of savings and borrowings. This should be taken in to serious consideration also. In addition, some countries have huge foreign debts, high inflation and high unemployment of its people. This leads to foreign exchange problems that will lead to foreign economic instability and the decrease of the currency of the country in value, hence the company should focus on these factors in order to make decisions whether to go international or not.

Marketing Information System

A marketing information system is a system that consists of people, procedures and methods to get information, analyze the information, evaluate and distribute this information to marketers to make good decisions out of it. It is the proper use of marketing research. It is vital because it assists a company to know what it needs in terms of information and how it will use the information to come up with a good decision in the shortest time possible. It is done by the marketing research team of the company.

A market information system includes the sales information systems. These are reports that are made from the up to date sales of a company from the customer and sales representatives. It also includes the marketing intelligence system which is the procedures and sources that are used in the company to obtain information about marketing progress in the environment where they operate (Marketing Information Systems, n.d.).

The marketing intelligence system (MKIS) also includes the marketing research process which is the designing, analyzing and collection and reporting of data findings to be sued in the company for marketing. Information about MKIS can be collected from various sources around the company. Some companies have data in the marketing research departments and others have to go in to the field to look for information. There are two sources of information including internal and external sources.

Internal sources for Marketing Information System are most places where the company can get information from the books of accounts, various records kept in the company and former research that was done. Those are the information from records previously kept by the company. External sources include those sources that are from outside the company like publications, books, periodicals, encyclopedia and also commercial data that can be obtained by companies by payment of a fee to research companies. Companies can also get information from the internet (Skyrme, n.d.).

It is very important for a company to have a good Marketing Information System because it helps the company to get more useful information quickly, for expansion, it will assist them to predict how buyers will respond to changes in features of products, environment, and styles. The Marketing Information System also assists the company in competition and information about competitors’ price, branding. Furthermore, it assists the company to develop relevant advertising and good sales promotion, and the company also gets good information about marketing tools through the Marketing Information System (Kotler, n.d.).

Pricing strategy and quality

When price falls below equilibrium, demand for the phone increases which in turn surpasses supply. This creates a shortfall of the goods in the market. Suppliers respond to this shortage by increasing the price. The price would therefore be increased until it reaches the equilibrium point. The converse is true; if price gets beyond the equilibrium point, suppliers would supply more of the goods. There would be competition amongst the suppliers to sell surplus. The end result would be a reduction of prices until the point of equilibrium (Farnham, 2004).

The supply and demand is at equilibrium when the price is equivalent to the price of demand. If a graph is drawn, it will be at the point where the supply curve and demand curve intercept and this is called market equilibrium. Thus, equilibrium price is the relative price at which buyers require and is equal to the present value benefits of households towards homes. Equilibrium can only change if there is change in one of the demand and supply conditions that have been highlighted up there:

  •  An increase in demand will raise the price of good and an increase in the number of income available.
  •  A decrease in demand will lower the price and reduce the number of products being constructed.

In this case, the study will assume the supply has remained constant. When the supply also fluctuates, then things will be vice versa. Therefore, price is what the consumer has to pay willingly for a product or a service to a willing seller (Farnham6 , 2004).

The customer is the final recipient of the product/service of an enterprise (Culture Enterprise, 2005). Price is associated with the concept of utility and value; that is the value of a product is influenced by its utility to the consumer and the consumer must look for all means possible to possess the product service in terms of money. Since money is a scarce resource, a customer can only satisfy a need within his/her reach (Tan, 1994).

This means that the consumption expenditure of the customers’ purchasing power is to achieve any greatest possible satisfaction of his/her wants. Further, price concept can be difficult to understand because of introduction of new products in the market, segmentation of most consumer markets, geographical distribution of customers, and the existence of alternative varieties in the market (Tan, 1994).

Different customers have different perceptions of the price of the product. People with higher incomes will prefer goods at a higher price because they perceive it to be a good quality and their disposable income can allow purchase. If there is an increase in general prices without an increase in disposable income, it will force the average customer to adjust his/her expenditure for needs satisfaction; hence reduced consumption (Lipsey & Harbury, 1992).

Marketing potential

In order to analyze a market to know whether it has that potential for profits in the short run or long run, the company should first look at the particular market and see whether it has that potential for attractiveness. When a country uses this to identify the potential of a market, it will attempt to make a product that serves the needs of all customers in that particular market. This type of strategy is actually good especially for large companies that want to enter foreign markets (Lake, n.d.).

The first strategy is the use of undifferentiated marketing where it doesn’t divide the market to segments but goes to the whole market with one marketing offering. It then uses mass distribution to make sure that the products reach all people irrespective of the differences among the buyers and their needs and a lot more advertising and low prices than competitor products. In using differentiated marketing, the firm operates in several market segments and designs marketing and advertising programs for each segment (Moffatt, n.d.).

The mobile company can analyze the potential of the Indian market for more profits in the future by looking at the factors like size, the growth of the Indian population, profitability, economies of scale and the risk involved. The potential for long term profits can also be assessed by looking at resources of the Chinese market in relation to the objectives of the company.

Ethnocentricity

The cultures of people in different countries can affect the marketing strategies that a company will use as it enters new international markets (McNamara, n.d.). The company has to consider very many factors of the new international market place. Some of these are political factors, social factors, economic and technological factors. Looking at the social cultural factors ethnocentricity is a major factor especially if the new marketplace is in a country with diverse cultures (Virchow, n.d.). This is a major challenge because most of these people hold so much to these cultures that it is very difficult to make them adopt products and marketing strategies.

To enter a market like India’s market one must understand that they do not consume other products like pork as an example because that’s one of their cultural beliefs. This means that in order to enter such markets one has to understand the practices of the people in these regions, their cultures and other influences like customs, ethnic differences, and attitudes towards the products or services (Cofield, 1997).

The cultural activities of these people’s desires and their likes and preferences equip the individuals of the communities with certain value systems. On the other hand, compel individuals and the community to comply with certain demands and participate in certain activities (Kekäle, 1999). Ethnocentricity has a great impact on the type of media to use in communication of the product preferences to people of diverse cultures. The mobile company should understand this if they want to capture a large market share.

Product development

Product development is where the firm develops a new product for the existing market or innovate the existing product for the same market. For example, Coca Cola Company can be said to be producing the refreshing product for the existing market using a different test. Although the product is in the market, the production of light coke is the product development, which at times is called product differentiation. A company also can produce a new product, which has not been in the market, and this is through research and development of the product. Product diversification is also part of product development. A company can be involved in developing a new product and at the same time liking market for the product. That is called product differentiation.

Product market mixes strategy

Existing products                                                                           new products

Market penetration strategy
  1. More purchase and usage from existing customers.
  2. Gain customers from competitors
  3. Convert non users into users
Product development strategy
  1. Product modification via new features.
  2. Different quality levels
  3. New product
New marketsMarket development strategy
  1. New market segments
  2. new distribution channels
  3. New geographic areas
Diversification strategy
  1. Organic growth
  2. Joint ventures
  3. Mergers
  4. Acquisition/ take over

Product development involves product mix strategy, which was brought forward by an off, and he threw the following product market mix matrix strategy. Where the firm uses the current product and the current product as a form of product development is called market penetration. In addition, market penetration is to assist the firm in maintaining or increasing its market share of the current product.

It will also seek to dominate the market by driving out competitors and increase customer usage. When they use the current product and explore new market, we call it product market development, and market development, which will be discussed in fully when looking at geographical expansion, involves expanding to new geographical areas parking the product in quantities acceptable in the market starting new distribution channels and having price differences to different types of customers.

Introducing new products to the existing, current, or present market is called product development. Product development has many advantages, which include innovation-discouraging entry to the market there is also a risk of failure.

Product Market Mix Strategy

Product Market Mix Strategy – An off drew up a growth vector matrix, describing a combination of a firm’s activities in current and new market, with existing and new products. The product-market mix strategy is illustrated in diagram below: Current products and current market- market penetration

Market penetration: the firm seeks to:

  1. Maintain or increase its share of the current market with current products.
  2. Secure dominance of growth markets.
  3. Restructure a mature market by driving out competitors.
  4. Increase usage by existing customer.

Present products and new markets: market development

  1. New geographical areas and export markets
  2. Different package sizes for food and other domestic items so that those who buy in bulk and small quantities are catered for.
  3. New distribution channels to attract new customers (e.g. organic foods sold in supermarkets not just specialist shops)
  4. Differential pricing policies to attract different types of customer and create new market segments.

New products to present markets: product development

  1. Advantage – Product development forces competition to innovate, new comers to the market might be discouraged.
  2. The drawbacks include the expense and the risk.

New products and new markets: diversification

Diversification occurs when a company decides to make new products for new markets. It has to have a clear idea of what it hopes to gain from diversification. There are two types of diversification, related and unrelated diversification.

  1. Growth – new products and new markets should be selected which offer prospects for growth, which the existing product market mix does not.
  2. Investing surplus – funds not required for other expansion needs: but the funds could be returned to shareholders.
  3. The firm’s strengths matches the opportunity if – the company has developed outstanding new product’s research and development department. The profit opportunities from diversification are high.

Mergers and Acquisitions

Criticisms of secondary sources

The researcher used literature that was not up to date, however, some of articles and works reviewed or adapted were containing relevant literature for this theme. One major deficiency noticed in the articles was the absence of the relationship between quality of strategies used by multinationals and market forces. Notwithstanding, all this criticism, they formed the important part of this thesis and have contributed positively to this research.

Methodology

Introduction

Some form of methodology was used to perform for entrants an analysis of the effective suggestions to achieve entrance and market share in China for a multinational. Data needed to be collected and arranged in a meaningful way to perform a quantitative and qualitative analysis. This section will assist in the analysis of the paper. Moreover, the data required and their location will be revealed. The method of inquiry and the analysis, which will be performed on the data, will also be discussed. The data utilized will be the entry strategies and economic performance multinational companies. Data is needed to support entrants in their projections of their market share in China in the future.

Method of inquiry

Data for this project will be collected using internet search engines and library sources. Quantitative method of research will have little use as the writer will not carry out quantitative analysis of the data that is going out to collect information. Instead, the literature will be used in quantitative analysis. Quantitative approach will involve analyzing the people’s attitudes, behaviors and opinions which will be available in the internet search. The research will develop a methodology which could be based in descriptive and inductive reasoning. This is important because the research does not involve physical data collection and it creates a foundation by which the research will be conducted and consequently analyzed.

Two evaluation methods are employed in this research. First, a qualitative method is utilized to analyze the advantages and disadvantages of alternatives for entrants to have effective marketing efforts in India. In addition, the best suggestion for entrants to enter in India’s market will be presented by a decision analysis.

The main objective of this dissertation is to identify how the chosen research methodology will match the main objective of the dissertation question and how it will be achieved. Essentially, there are two types of research methodology; they are qualitative and quantitative research. While the quantitative research is carried out through obtaining primary data such as questionnaire, qualitative research is a research that is conducted through interviews and observations. Therefore, the method enables a researcher to explore the details of individual perceptions over phenomena.

Research Approach

The research approach that develops the methodology explained below is based on descriptive research theory and inductive reasoning. This is important to develop the foundation by which the research will be designed, conducted and consequently analyzed.

Firstly, it is important to establish the research approach in order to create a significant qualitative methodology. The research approach undertakes a specific design that is “the overall strategy chosen to obtain the information required answering the research question” (Ghauri and Gronhaug p 47, 2002). The research approach will review the types of research design and data collection methods. The research approach is built on logical relations and not just beliefs.

Descriptive research is used when the research question is understood (Ghauri and Gronhaug 2002). In the research approach, the data measurements are dependent on the obtainment of required information and the quality of the information. The outcome of the research, therefore, is dependent on the measurement procedures used in the collection of the data, and this in turn is dependent on the types of data collection (Ghauri and Gronhaug p 47 2002).

This is an important concept of qualitative research, where the description is either inductive or deductive. Inductive research begins with a question and seeks to describe it, and deductive research begins with the problem by working backwards to the answers. Therefore, this research uses the inductive approach to build the theory from the data gathered to explore possible conclusions.

3 collection of Theories and Secondary Sources

We have gathered information from various literature reviews, which are available at internet scholarly books, journals and newspapers. Theses materials used are not sufficient to add something new to the subject, which has been extensively researched.

Results And Discussion

Analysis of China market

China is a country which is a gateway to Europe, Africa, Asia and other parts of the world. They have industrious businessmen with international business connections. Most products pass through this vast environment with a lot of challenges. We have two types of environments that we shall deal with when analyzing India as an international market center. To begin with, internal environment factors are those factors that deal with strengths and weaknesses of a country.

This comes down to the marketing elements, income of households and other factors motivating companies to enter into the country. A company that is willing to enter into the India must make good decisions in areas of marketing in the internal environmental factors and manipulate them to achieve marketing objectives. That is the proper use of each factor.

There is also the side of external factors which we ought to take care of. To begin with, we shall analyze PEST, SWOT and five forces of China.

P.E.S.T

Political factors

Political factors will affect the company entering India. Some of the political barriers will be vastable if the government has bad officials who award businesses to those people offering bribes not highest bidders. Also there are some governments that will impose high tariffs to protect their home industries. At times poor political environment will make countries make many regulations on countries entering and leaving countries, this will scare companies wanting to enter into the environment. Political environment is inclusive of tax laws, other government laws, government agencies, pressure groups that will form a barrier that bars entry into the country. There is also some good factors that offer opportunities for companies to enter into the market.

For entering into the China, one must be conversant with the law of the land which will enable him understand the market. This will assist in protecting competition, a system to understand the consumer patterns of the country and the type of the products which can be sold easily in the market. For the multinational it is easier to operate in the China because the laws of the land have been lessened to allow operations of companies in the China. This is because China is the center for commercial activities linking Africa, India and some parts of the world.

Social

Social culture factors of China contribute greatly to the trading within that country. Some of the foods that are being marketed in the hospitality industry cannot be sold easily in the market of China the same may applicable to other products. Therefore, if you want with the Indian market, you must have products that will match the tastes and preferences of the citizens. Most people have different behavior of buying goods and services in China. Some of the cultural factors will affect some companies from entering into the market. People in China will perceive a foreign country that is entering into their market based on its origin. This is because of their beliefs and values.

There are other social factors that need to be considered by a company intending to enter into India. These factors include family factors, social classes and sub cultures. Some beliefs affect the multinational if targeting holiday makers who are wiling to mix with the local population. These beliefs, values, norms of the China should be taken care of before a new company thinks of entering in to this market. These beliefs, values and norms are strong and are the basis of core values and beliefs of a country. To avoid resistance, the company must at all costs ensure that they have complied with these beliefs.

With products that needs the taboos and beliefs of residents of India, there is a greater opportunities for any company wishing to enter into China.

Economic

Economic factors of a country are the measure of the ability of the citizens to purchase some goods or enjoy some services. Its majoring how people spend their money, their power to purchase goods and services and income distribution among people. People in the China have different patterns of savings and borrowing as compared to people of Europe. This is because of their culture. For example, because of their culture they spend less money on fornication (it is unheard of).

Therefore, any company wishing to enter into the market in the China must take care of the above mentioned factors. China have low foreign debts, low inflation and high unemployment rate of its people. This makes them among the best countries to invest in the market so long as the company brands the product and services to suit the culture of the people. This country has the strong foreign exchange balance of payments that has led to their foreign economic stability and increase of their foreign currency values in the international market arena. With such kind of foreign income strength, the country is a good bet.

Technological

Being the center of trade in the Asia and a gateway to various parts of the world, China have had internet connections among its citizens. There is also cheap technological equipments in the market. This makes technological equipments like mobile phones, computer, radios, TV’S, navigational personal assistance, modern motor vehicles find their entry to the country easily. Being fully computerized country unlike their neighbor countries India has better chances of customers who wish to travel to have country information on the internet. It’s known in Africa that if you want to get technological equipment, u will have to travel to the China.

This availability of cheap equipments makes the country. In view of the world’s trend, majority of the consumers, travelers and holiday makers are relying on the internet information which can be available anywhere because of wireless broadband connections which has made internet connections easier.

The SWOT Analysis

China as a country has many strengths, weaknesses, opportunities and threats that actually affect the performance of companies in a country.

Strengths

China is situated on the south of Asia and is neighbored by countries which have huge financial resources which accrue from oil and entrepreneurship. Therefore, being the center of a unique world resource, again offering a center for international trade, it is a strength that each chief executive of multinational companies will wish to be associated with. They also have a strong currency, low inflation rate, strong balance of payments and low unemployment.

Weaknesses

China has many companies operating in Chinese market because of their position. The citizens of the country re naturally businessmen thus they have assisted in putting up similar facilities in the country. They have strong cultural beliefs which hinder some companies from operating within the country. China is among the countries with strictest rules over ownership of land property. Individuals outside the countries find it difficult to own property. The country also has strict citizenry laws governing the laws. The laws bar some people from entering the market. There is also a trend of terrorism whether or imagined in the area because of the said Alkaida network and other networks wishing to revenge.

Opportunities

There are many opportunities available in the Asia especially in the China. This is because of the increase of businessmen wishing to trade from China. This makes multinational have a large and growing market. The instability in the neighboring countries like Afghanistan, Lebanon, Kuwait and threats of terrorism in neighboring countries has made China a safe haven for travelers thus opening multinational company to be of great importance. The people of China have mixed with other cultures and they are now becoming aware of other products and services available in the Chinese market and are offered in other countries. This enlightens is one way of enlarging the target market for the growing market goods.

Threats

There are a number of threats affecting Chinese market. There is the trend of stability of the neighboring countries which may cause the exit of some companies to neighboring countries. The instability in Afghanistan, is also contributing to failure of some multinationals in entering into the China.

Five forces

Potter being the originator of the five forces identified forces that drive competition within a country or an industry. This include threat of entry of new competitor into the industry, intensity of rivalry among the existing competitors, pressure from substitutes, the bargaining power of the buyers and the bargaining power of the suppliers.

In relation to China, five forces also work very well.

Buyer’s power

China faces the threat of buyers or visitors shifting their loyalty to other countries. This is because of the trend of terrorism or any other reasons. For the country to be able to succeed in fighting the shifting of loyalty, they must counter this trend through ensuring the safety of all visitors, reduction in price. Lastly, they should also be able to adopt differentiation strategies by having many companies offering different types of goods and services from those offered in the neighboring countries so as to keep the company ongoing. These companies that are developed should be economical and friendly to visitors.

Supplier’s power

China is faced with the threat of entrepreneurs being able to control the capital inflow to the country. This is because majority of visitors in their hospitality industry and incoming companies happen come from Europe. Most countries if not in good terms with the China may issue travelling advisories to their citizen to China. These advisories will affect the market of India. To counter this force, the country has extended its investment policy and international relationship to other countries. They have also decided not to engage in any activity that affects the country’s international relationship thus providing good environment for inflow of capital to develop the industries.

Barriers to entry

The other force that is challenging the hospitality industry in China is entry of new companies with similar services in their country. This could pose the threat of neutralizing the company’s profits as well as reduction in market share. For any company to be able to succeed in this environment, they should be able to adopt the generic strategy of cost leadership.

Rivalry

There are many companies operating in the country which poses a threat to an industry in question. The threat here is that there is constant swift of loyalty of customers form one company to another. This threat is countered through the reduction of prices which in turn forces some weak companies to leave and allowing the prices to stabilize.

Threat of substitutes

There is a threat of substitutes and from the economics point of view, a threat of substitutes arise when demand of that good is likely to be affected when price changes. This elasticity of price has formed a reinforce that the company has to fight with if t have to be sustained in the near future. To reduce the strength and danger of this force, a company wishing to trade with the Chinese market will have to adopt differentiation generic strategy as their frame work.

Competition analysis

There are many established competitors for Chinese market including the local companies. These companies include companies from Italy, Malaysia, USA and Britain. These companies are operating in many countries but their products and services have greater advantage as compared to new companies that are entering to the market now. Since the industry where the company will be operating with companies that have already achieved their objectives, a new entrance into the market will have difficulty in attaining their objectives. There are competitors from within and without. These companies include those from Europe, Asia and Africa.

This provides a great competition to any entrance in the market. This will call for a company to use differentiated marketing that is operating several markets segments and designs and using different marketing programs to different customers. They will analyze the potential of the market for more profits in future by looking at factors like size of population, the purchasing power of the population, the growth rate of the population, profitability of companies operating there, economics of scale and the risks involved. The potential of competition will be analyzed on the basis of long-term profits that can be attained by the company.

Government policies

As mentioned, the political factors affect business in the industry. The government taxes, laws affecting licensing of new businesses in the India and laws relating to land affect the hospitality industry. It is common knowledge that it is difficult to acquire property in the China. That kind of law also affects the business of the area.

Consumers

The population of the China has their beliefs and values. To enter such a market, one must understand what they consume and what they don’t consume. For example, an industry player will find it difficult to include pork as part of their menu. This is because of their practices, culture and influences of customs which creates attitudes towards food products. Their cultural activities desires and likes as well as preferences equip the individuals of the communities with certain value systems which compels them to act or consume certain product. These will also affect the demand to the same direction. Therefore, customers’ beliefs, attitudes, culture and customs affects performance of business regardless of the purchasing power.

Risk factors

There are many risks that need to be countered. This has been analyzed among other analysis above. This include a risk of terrorism which can be mitigated by the government, the risk of entry of new competitors which will be mitigated though cost leadership and differentiation of products and services. India has attracted many companies to come to their market and these companies use various promotional mix which attracts the local population as well as international clientele to their population.

Market servicing strategies

These strategies that have been made possible by the government enable the entry and exit of new industrial players possible. New players come to the industry but find it difficult to be sustained with the type of competition that is prevailing in that market. Some opt out of the market while others enter into strategic alliances with companies that are already in the market enabling them to survive. With the industry’s environment prevailing in the China, no company can opt on standing on its own while succeeding in the same market.

From promotional activities experienced, there is evidence that most tools which are used comply with the company’s and country’s ethics. No company will survive in the market without the involvement of local partners and stakeholders in the success of a company within an industry.

This calls for important decisions relating to the type of products, a place to invest (location) and amount of capital that will be input. They should make a decision on how to enter into the country, whether strategic alliances, vertical integration, product differentiation or geographical expansion. All these pose serious challenges that a company has to overcome in order to survive. They are also facing a challenge of the citizens of China adapting their products and services. They also face the challenge of pricing that is how to price their products. The people of China have different negotiation styles while purchasing consumer goods. This is another challenge that this company has to face.

Although there is enough population, the method of advertising will also affect the company. Like in china, advertising through the TV and other media may work very well for the company while India, personating of advertising may be of higher value as compared to in china. This is because of the culture of the population.

Strategies used

The company should adapt the four P’S. That is positioning, promotion, price and place in marketing themselves in the China. Mergers, acquisitions, joint ventures, strategic alliances, takeovers strategies are also adopted.

Summary

Companies operating in the China have succeeded in one way or another regardless of the challenges they are faced with. The major challenge of the company that it has to overcome while entering the China is the rise of competition. There are many companies operating in the market and this offers real competition. Another challenge a company is facing while entering the China market is the challenge of foreign laws. The government taxes registration and other license laws pose a challenge to a company planning to enter into China market. There is also the challenge of cultural religion and traditions of the people of China.

The type of products they will market must comply with the requirements of the country’s citizens. culture is the major factor that has a great impact on the type of media to use in advertising products of diverse culture like in the China.

In order for successive market entry and achieve better market results within the country, there is need for proper market planning for the company in question. And a good market plan should entail a broad marketing objectives and strategies based on the analysis of the current market situation and opportunities. Then the analysis of strategic opportunities available in the India and the setting of the market. The market analysis consists of analyzing the current marketing opportunities, researching and identifying the target market Then the process of organizing and implementing the strategy of entries follows. After entering the market, the issue of controlling the activities of the company to ensure that they are consistent with the objectives of the company.

This study suggests there is merit to analyzing how strategic variables interact in periods of decline. It also should encourage the use of a resource –based approach for predicting how small business owner/manager responds to deteriorating financial performance. Although decline is not always the most popular subject, understanding the context of aggressive or passive strategic choices should help explain the behavior of small business owners, when this get tough.

Conclusion and Recommendation

Conclusion

Multinationals have moved into Chinese market for the last four decades since china opened their marker and its economy for direct investments. In the oil industry, British petroleum has entered the market with force and it is doing well in the market. Other companies like Coca-Cola, Pepsi, Schweppes, Motorola, Nokia; Volkswagen has entered the Chinese market and are succeeding in the production of the services. The entry of these companies to chi9na was facilitated by the openness of the Chinese government where they offered a half of the corporation task of those companies operating in the market.

The companies also were allowed to import capital goods duty free which enabled the companies to enter Chinese market with easiness. The Chinese population took the initiative to start their local corporations which has become a source of competition to the foreign multinationals to china. The Chinese population initially consumed the multinational products in large quantities without discrimination until there was growth in the economy which allowed the local population to have the capacity to produce goods of similar value and test the perspective towards product fro internationally held companies changed. Since that period the consumers are careful and they take goods and projects from international which fits the ethnocentricity.

The Chinese consumers have changed statics which was initially according high value to multinationals products to the current demand for quality and price of the product. This has changed strategies multinationals are adapting in managing multinationals in china. Multinationals contributed greatly to the current state of Chinese economy through the injection of tangible and intangible assets to the Chinese market.

The entrance of companies like British petroleum came in with technological equipments, huge capital inflow, knowledge and skills, and good management skills which have been adapted by the local companies and have enabled them to appreciate in value. This was made possible by the Chinese government which enabled them to open up the market for multinationals to come to them. Today china stands that ethnocentricity plays an important role for the Chinese market as recently a food fast multinational was forced to cancel an adver3tisement into Chinese market when it was said to be not meeting the culture and beliefs of the people of china.

For any company to boost or imagine of succeeding in the Chinese market they must be able to analyze and asses their knowledge of the cultural beliefs and likings of the people of china as well as understand the political and legal environment before they are driven out of business by the government of china. This means that for a company operating in china must have a local fare view strategy in terms of cost leadership, product differentiation, stake holders, and the political prevailing in the state they are operating in. this will be in line with the current strategies prevailing in the Chinese market where the government is trying to localize every institution.

Multinationals permeate local organizations in china supporting them in getting good management skills and knowledge through the provision of capital from employment. Although multinational operating in china are provided assistance in the growth of economy in china, they are designed to handle their activities for the success of their country of origin through the outflow of some rewards to the factors of production. This always includes transfer, license for some products, dividends for capital, transfer of income from foreign employees and probably shares of profits.

There is a swift from the traditional management styles of multinationals to new innovative ways of trying to localize a multinational in the country of operation. This has been adapted by some companies operating in the Chinese market and there should be a well defined scoop through which research should be carried out of the market penetration in china.

Recommendation

Any multinational that needs to go to, operate and remain relevant in the Chinese market must have a good and effective marketing plan with a good strategic approach. For a marketing plan to be effective, the following should be implanted; investigate the present situation, consider alternative causes of action, select one of the alternatives, provide both human and material resources, communicate with everyone involved so that each knows his or her particular role in the process and evaluate progress periodically in order to ensure that action is taking place according to the plan.

Like any other marketing plan a good international marketing plan lays out the broad marketing objectives and strategy based on the analysis of the current market situation and the opportunities. A marketing plan assists business strategic units achieve their objectives in the market hence there is need for a good marketing plan. Managers of a company have to follow a marketing plan in order to achieve their objectives. They have to work within plans set by people above them for the company’s goals.

This consists of analyzing the current marketing opportunities, researching and selecting the target markets, then they will design marketing strategies, plan the marketing programs. Then the process of organizing, implementing and controlling the marketing effort follows. A marketing plan is vital for each company, product line or even brand, for effective achieving of goals.

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Multinational Corporations in China: A Strategic Approach
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