The following feasibility report on JT Toy’s interest to manufacture overseas has thoroughly explored the positive and negative aspects of local production in comparison to moving its operations to China. Manufacturing methods, such as a wholly owned subsidiary; owning and controlling a factory in China, a strategic alliance and licensing agreements have been analysed in detail.
The evidence shows that moving part of the business to China as a wholly owned subsidiary, whilst keeping its headquarters in Melbourne would be the most beneficial long term option. Paying royalties and dividing profit with an overseas company outweighing the higher short-term construction costs and wait time disadvantages of a wholly owned subsidiary.
Alliances and licensing agreements with Chinese manufacturers another beneficial option, particularly in the short-term. Offering an initial low cost entry into the global market, while still gaining the benefits of low labour and production costs prevalent in China.
The information gathered on the socio-cultural, economic and industrial elements that need consideration in such a venture show no financial disadvantage, only opportunity. Social, cultural and lingual barriers as well as a different style of business practice must be overcome. With the necessary training, this transition can be carried out, providing a successful expansion for JT Toys into the global market.
This is a feasibility report on internationalisation of an Australian company. JT Toys is a successful and profitable business located in Melbourne. JT Toys has been producing quality educational toys for over 10 years; its well established reputation has seen demand for its products double over the last few years. JT Toys employs
Bibliography: Bartol, K, Tein, M, Matthews, G & Sharma, B 2008, Management: A Pacific Rim Focus 5edt, McGraw-Hill Book Company Australia Pty Limited, North Ryde.