Globalization presents risk and opportunities today and in the future. Transnational Organizations (TNOs) were the beneficiaries of the globalization; they expanded their activities aboard, created an international mentality and adapted their strategies for substantial growths. Many domestic markets of TNOs are already saturated and through the process of expanding abroad TNOs have been looking for new markets with a high growth potential. Nowadays, China represents a promising target for nearly every TNO. However, many TNOs fail to enter the Chinese market successfully or are not able to capitalize their potential.
The purpose of this report is to conclude why China is attractive for TNOs, what the specific risks and challenges are, when operating in the Chinese market and on which aspects a TNO should focus when entering China.
In order to answer these questions, the present economic situation, including the influences by the economic crisis, is analysed to demonstrate the relevance of the Chinese market. The current situation of TNOs in China is explored to provide an understanding of the different strategies to cope with the various challenges and risks in China. As a result an outline of the key success factors and most relevant strategic decision will give advice for the implementation of an efficient strategy.
Transnational organizations have to target the Chinese market in order to remain competitive in the process of globalization. Poor infrastructures, different cultural behavior, copyright violations, fierce competition or concerns on the legal systems are risks that TNOs have to face in China. Therefore, transnational organizations need to implement efficient strategies in order to exploit their full potential in the Chinese market.
Entering the Chinese market can be done by four major entry modes: Exporting, Licensing (Franchising), Joint Ventures or Foreign Direct Investment.
It can be concluded that TNOs have to focus on an efficient innovation strategy and incorporate local responsiveness in their culture in order to adapt their company to the market environment of China. One global strategy for all countries, as in the past, is not possible anymore. TNOs have to implement a “Think Global – Act Local” strategy. The prospects for the Chinese economy are still promising and will continue to offer TNOs enormous competitive advantages.
CONTENTS
MANAGEMENT SUMMARY PREFACE
1 Introduction
1.1 Motivation for Research
1.2 Purpose
1.3 Problem Statement and Research Questions
1.4 Research Method
1.5 Structure of the Report
2 Economic Climate & Forecast
2.1 Economic Climate
2.2 The Chinese Economy
2.3 Forecast of the Chinese Economic Development
3 Role & Importance of Transnational Organizations
3.1 Definition and Characteristics of a TNO
3.2 Transnational Organizations in China
4 An Efficient Strategy for the Chinese Market
4.1 Approaches for a Market Entry
4.2 Relevance for the Chinese Market
4.3 Innovation Strategy
4.4 Relevance for the Chinese Market
4.5 Realization of a Winning Innovation Strategy
5 Threats of Doing Business in China
5.1 General Risks & Threats
5.2 Business Risks & Threats in China
6 Conclusions
Bibliography
List of Figures
List of Tables
Appendices
Appendix 1: 360 Degree Analysis
Appendix 2: Economic Overview China
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