Chinse Case Study

Topics: China, People's Republic of China, Economics Pages: 3 (814 words) Published: May 10, 2011

1. How important is the political environment in china for the Darby Company? Explain.

Looking at the case, I think the political environment is really important for the Darby Company. As the phone doesn’t contain the state of art technology and it can produce it at cheaper price, the Chinese government has higher chances to walk away with the agreement done with Darby Company and start producing the phone by themselves. This is because the Chinese government has a different political environment compared to other countries. Their economy differs from the economies of most countries belonging to the organization for economic cooperation and development in respects such as structure, government involvement, level of development, growth rate, capital reinvestment, rate of inflation etc. Darby Company should look into the pros and cons before entering into an agreement with the Chinese government. This mainly implies that they need to concentrate more on the political aspect in china. This is because of the stories being told about the Chinese government and not keeping up their word on the agreement. There is so much on stake here and the Darby Company need to consider every minor aspect that comes into account to get into an agreement with the Chinese government. If the contract is been broken by the Chinese government, the Darby company would be in a big mess. They would probably be in losses if the Chinese government tries to break the agreement and do the business by themselves. There is so much to be considered here. Thought the Chinese government has agreed to sign a contract with the Darby Company, there is a chance that it can be broken and it would yield both the parties to the court. This would cost a lot to both the companies as the fees would be considered individually. This is an unnecessary loss to the Darby Company and moreover once the technology is known to the Chinese government there is every way that they can...
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