Case of Doing Business China

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CASES OF DOING BUSINESS IN CHINA

Editor: Professor Zhu Mingxia

University international Business and Economics
2010

CONTENTS

Introduction to China In context of “Doing Business in China – A Global Perspective”
CASE 1: Starbucks management strategies in China
CASE 2: The expansion of McDonald’s in China
CASE 3: A Case Study of KFC and other Fast food Chains
CASE 4: Successful story of IKEAN in China
CASE 5: General Motors in China
CASE 6: L'Oréal Group
CASE 7: Market entry for David Lloyd in China
CASE 8: The water treatment market in China
CASE 9: Danone Group
CASE 10: A Success Story in Retailing: Carrefour
CASE 11: The Expansion of Snow Beer in China

Introduction to China In context of “Doing Business in China – A Global Perspective”

Introduction

China is set to emerge as the world’s greatest economy and superpower in the near future. As global organisations rush to expand operations in the largest consumer base in the world, the global economy as a whole is accelerating as rapid, substantial changes in technology unfold. China is said to be the manufacturing capital of the world, and although true, organisations are increasingly looking to China for more than purely cost competitiveness.

Globalisation & ‘The Flat World’

“A set of processes leading to the integration of economic, cultural, political, and social systems across geographical boundaries” Globalisation is the single, most influential driver of change in the 21st century. Management out of necessity are forced to align their business operations with the emerging global economy in order to merely survive in today’s environment. The global market place is intrinsically linked to technology as a means to close the gap of time, culture and geography. A few major recent historic converging events are regarded as core drivers of globalisation as we know today and are investigated below. Although the internet was around for some time, Netscape Navigator, released in 1994 is regarded as bringing the web to life by allowing ordinary users to interact with content easily. Netscape triggered massive attention during the mid 1990s, the so called ‘dot com boom’ as investors scrambled to cash in on the newly established, ‘information revolution’. Huge investments during this time were placed on network providers such as Lucent, Cisco and Nortel. With such a rapid increase in capital, an estimated $1trillion was spent during this time laying thousands of miles of fibre optic cable, establishing high speed infrastructure links between the United States, Asia and Europe. Over-investment at this time lead to the ‘dot com bubble’ and the as a consequence, the ‘dot com burst’. While the ‘dot com burst’ paved way for a more conservative approach to IT investment as the public perceived the information revolution extinguished, this was merely the end of the beginning as the investments in fibre optics effectively made Asia and the United States next door neighbours overnight, allowing more people than ever before communicate virtually for free. Another major contributing factor occurred in the 1990s which saw extraordinary development in a plethora of software applications which when combined with high speed data exchange, had the effect of creating a multiplicity of forms of collaboration. This instance during the 1990s is regarded as the genesis of globalisation and the flattening of the world. Outsourcing has also contributed to the flattening world as managers realised the potential for coordinating business operations online to radically cut costs, leveraging foreign location economic conditions. Similarly, the rise of ‘offshoring’ practices has also emerged. We see a wide range of open-source software development collaborations as a result of globalisation, a powerful form of collaboration. The Firefox web browser created by a 24 year old from New Zealand and a 19 year old from Stanford University was downloaded over ten millions...
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