Evaluation of Joint Ventures as a Mode of Entry into the Chinese Market

The case of Volkswagen and Shanghai Automotive Industry Corporation

Dossier / Travail , 2015 , 12 Pages , Note: 2,3

Gestion d'entreprise - Direction d'entreprise, Management, Organisation

This term paper will first of all give an overview of existing foreign market entry modes. Secondly there will be a description of joint ventures in general by analyzing typical motives and risks for using a specific mode of entry to internationalize. At the end of the second part, the situation on the Chinese market is discussed to introduce the reader to the concrete business case of Volkswagen and SAIC Motors, which will be discussed in the third part. Finally, this paper will provide an evaluation of the success of this joint venture on the Chinese market.

Globalization, in recent times, has generated a lot of interest in the business world. More companies are now seeking to escape their comfort zones (home markets) and enter into international markets to expand their businesses. Internationalization has seen several factors as its driving force. More countries have opened their markets to foreign entrants through liberalization and deregulation of previous trade-inhibiting laws. Consumers, in most parts of the world, have also exhibited a homogenous behavior that encourages internationalization. Products that sell well in one part of the world have shown the likelihood to perform the same in other areas, which has motivated more companies to explore international markets.

Other external driving factors are an improvement in technology and logistics. It is now possible for companies to communicate and track the activities of each of its subsidiaries or branches in the world. Technology has offered a business with an appropriate infrastructure that ensures smooth running of their affairs worldwide. Some products also exhibit shorter life cycles; thus, limiting the amount a company can produce. Internationalization offers such company's ability to produce more by expanding their reach beyond local/home markets. Expansion into international markets by a company is motivated by several factors. One of the major factors is to spur growth and increase profitability.

Many companies are seeking to enter into foreign markets to expand their influence and increase their sales and revenue. Internationalization for such companies means an access to a wider customer base, which implies more product sales and more revenues. Expanding the size and scope helps achieve the economies of scale.

Inhaltsverzeichnis (Table of Contents)

• Introduction
• Foreign Markets Entry Mode
  • Overview
  • Joint Ventures
• Example: Volkswagen and SAIC Motors
• Conclusion

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This paper explores the different entry modes companies can use to penetrate foreign markets, focusing on the joint venture approach. It examines the motivations and risks associated with joint ventures, particularly in the context of the Chinese market. The paper then analyzes the specific case of Volkswagen and SAIC Motors' joint venture in China.

• Foreign market entry modes
• Joint ventures as an entry strategy
• The Chinese market and its attractiveness to foreign companies
• Case study: Volkswagen and SAIC Motors' joint venture in China
• Success factors and challenges of internationalization

Zusammenfassung der Kapitel (Chapter Summaries)

The introduction discusses the growing importance of internationalization and the various factors driving companies to expand into foreign markets. It highlights the need for companies to carefully consider their entry mode strategy.

The chapter on foreign market entry modes provides an overview of different approaches, categorizing them into strategic alliances and standalone entries. It delves into the advantages and disadvantages of various entry methods, including contract manufacturing, licensing, and joint ventures.

The chapter on Volkswagen and SAIC Motors' joint venture in China examines the specific case study, exploring the motivations behind the partnership, the challenges faced, and the success factors contributing to the venture's performance.

Schlüsselwörter (Keywords)

This paper focuses on international business strategy, foreign market entry modes, joint ventures, the Chinese market, the automotive industry, and the case study of Volkswagen and SAIC Motors. It explores the motivations, risks, and success factors associated with international expansion.

• Université: University of Applied Sciences Essen
• Note: 2,3
• Année de publication: 2015
• Pages: 12
• N° de catalogue: V320278
• ISBN (ebook): 9783668202665
• ISBN (Livre): 9783668202672
• Langue: anglais
• mots-clé: evaluation, joint, ventures, mode, entry, chinese, market, volkswagen, shanghai, automotive, industry, corporation