Consultancy Report

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Great Wall Motor Company Limited

Consultancy report on an expansion to Germany

Maastricht University
School of Business and Economics
Maastricht, May 30th 2011.
Study: International Business Economics
Course code: EBC2027
Group number: Tutorial 03
Tutor name: Lisette Kluin
Writing Assignment: Consultancy Report

Table Of Content

Executive Summary……………………………………………………………….p.3

Introduction………………………………………………………………………...p.4

Analysis of Host Country
Economic Environment……………………………………………………p.4 Political Environment……………………………………………………..p.6 Legal Environment……………….………………………………………..p.7
Legal Environment in General…………………………………………p.7 Legal Forms of Companies…………………………………………….p.7 Taxation……………………………………………………………...p.7 Foreign Direct Investment…......................................................p.8 Cultural Environment..…………………………………………………...p.8 Trade Barriers…………………………………………………………….p.10 10 Reasons To Choose Germany...……………………………………..p.11 Conclusion from the Host Country analysis………………………..…p.12

Analysis of Great Wall Motor
SWOT analysis……………………………………………………………p.12 Strength……………………………………………………………..p.12 Weaknesses………………………………………………………….p.13 Opportunities……………………………………………………..…p.14 Threats………………………………………………………………p.15 Conclusion from SWOT……………………………………………..p.16

Management advice
Entry mode………………………………………………………………..p.16 Scale of entry……………………………………………………………..p.17

Conclusion…………..………………………………………………………...….p.18

Sources………………………………………………………………………….…p.19

Executive Summary

The quantity of goods exported from China to Europe has increased at fast rates over the last ten years. Many of those goods were mainly electronic devices. However, there are still no Chinese car manufacturers operating in Germany while Germans use their car almost everyday. This report will analyse if the entrance of Great Wall Motors in the German market is realizable for the company and whether it will lead to a higher profit or not. In case the analyse would say so, next step will be to find out in which way this could occur and what are the factors needed. We will go through the following steps one by one. We will first analyse the host country Germany. Next a SWOT analysis of Great Motor Wall is conducted, a management advice and possible entry mode for the company will be given. Finally, this paper ends with a conclusion. Germany is a country that has a stable economy, a strong legal framework and, is one of the most important members of the European Union since the central bank is located in Frankfurt, Germany. Its population is about 80 millions people and thus makes it an attractive market for car manufacturers. One of the biggest issues is that Germany is well known for its car industry. This makes it harder for foreign car companies to enter in the market. Furthermore, German customers are loyal to German brands such as Volkswagen, BMW or Audi. Indeed, there is a lot of competition in the car manufacturing industry. Taking this problem into account, Great Motor Wall should enter the market on a low price policy since most of the German brands are high price cars. Great Motor Wall has the competitive advantage to produce at low cost and should therefore focus on this point in order to entry the market. Last point is that Germany is situated in the middle of Europe and is therefore a strategic point to manufacture since it would lead to lower transportation costs.

Entering Germany is a decision that has to be made taking into account a possible profit while risky because of the competition. Other point that cannot be forgot is that Great Motor Wall has to pay special attention to cultural and legal differences. We recommend that they enters through Greenfield investment by building a plant or buying an existing one, depending on the amount of the investment. Great Motor Wall should focus on low price policy with cars that are the least bad for the environment.

Introduction

Great Motor Wall is a Chinese...
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