Comprehensive Analysis of Global Entry
Purpose of Assignment
Perhaps one of the first key decisions a prospective business owner makes is the mode of entry in the chosen country. Making the correct choice will ensure the integrity of the business not only legally, but financially as well. Accordingly, a detailed understanding of the various modes of entry will provide students with the knowledge needed to properly select the appropriate organization.
Resources: Suggested but not required: Shamah, Shani. (2011). A Foreign Exchange Primer. New York, NY: John Wiley & Sons.
Search the Internet for vendors who sell this book or inquire about it with a local library.
Compose a 700-1,000 word analysis of the following modes of entry:
- Turnkey Project
- Joint Venture
Address the following in the analysis:
- Discuss and describe the various modes of entry.
- Evaluate the pros and cons associated with each mode of entry.
Consider the mode of entry for the country you have selected in the Week 2 Individual Assignment.
For this comprehensive analysis, I picked Quiznos franchise that deals with fast moving food due to the fact that they are aspiring for universal development. I realized following my examination on their website that they are aspiring to move to Asia. Out of the information presented in that website, it was evident that they are almost moving to China since they are at the moment opening a franchise store in Malaysia (Inside Retail Asia, 2015).
Due to the fact that this organization aspires to take part in the Asian market, this area contains a number of trade agreements. However, the only trade agreement that directly involves China is known as (ACFTA) that stands for Asean-China Free Trade Area (Inside Retail Asia, 2015). This trade agreement comprises of around eleven Asian states that make up its members. The trade treaty lowers exporting charges on close to eight thousand commodities. The trade plays a fundamental role whenever an organization imports fresh commodities for their eateries (Inside Retail Asia, 2015).
According to Lanallina (2013), the region faces political instability. Instability of this area is due to the fact that for many years Vietnam, China, Brunei, Taiwan as well as the Philippines have had a disagreement over the islands south of China Sea. Additionally, China has been establishing Islands in this region and also increasing their navy’s patrols among the established Islands what has in return led to an increase in volatility (Lanallina, 2013). Terrorism intimidations have highly increased over the last four years. For instance, Malaysia lost a plane (MH370) into the ocean while on route. On the other hand, the influence of terrorist groups such as the ISIS have highly increased in Bantam as well as in Malaysia. Therefore, in light of this, the rise of terrorist intimidations has made it a risk to operate a business in this area.
Country Risk Analysis
Lanallina (2013) argues that standard trade association between China and the U.S. was dignified in 2000 following the China U.S Act of the year 2000. This act comprised of reductions on tariffs as well as the abolition of barriers to exports that are from the U.S. (Inside Retail Asia, 2015). Developed urban areas of China include, Beijing, Guangzhou and Shanghai. The states contain several people of China origin who have the ability to communicate well in English (Lanallina, 2013). Moreover, the city of Shanghai is a home to over 400,000 people who come from various parts of the world (Inside Retail Asia, 2015).
China’s physical environment gives a threat for the development of business due to the problem of air pollution as experienced in Beijing (Lanallina, 2013). The many cars that are found in Beijing as well as the many industries that manufacture commodities there play a role in the city’s air pollution. However, many people argue that it is the electrical plants that burn coal that have brought the issue of pollution in that city. Also, the city of Beijing faces the problem of water pollution that has a huge impact on the hygiene of the business (Wellings, 2013).
According to Ybanez (2016), making a comparison of China’s political stability with that of other developing markets, it is probable that they have a very low threat, low political vehemence, least interruption and also little demo against the administration. The major risk that is faced is only inadequate transparency in regulations that are applied to business (Ybanez, 2016).
Ybanez (2016) argues that economically China gets enormous foreign investment thereby making it one of the prime recipients in the universe. Public regulator endures to attract foreign organizations as well as flagging way for investment in the country’s stock market. The country’s securities as well as the regulatory commission declared that USA-China economic and strategic dialogue that was carried out in Beijing showed that qualified joint and foreign venture organizations in China can easily be listed as private security organizations that have AMAC (Asset Management Association of China) (Inside Retail Asia, 2015).
Wellings (2013) claims that
China’s culture differs from the culture in western countries. They prioritize relations as opposed to getting things done. Therefore, those companies which carry out their operations in China need to anticipate that things can be done only if they prioritize the establishment of relationships and also create some kind of trust.
Lanallina (2013) claims that Quiznos food retail franchise is an organization that focuses on crisped submarine sandwiches. The organization was established by Jimmy Lambatos in Denver, Colorado. Currently the organization runs around one thousand eateries in America. Overseas they are found in Russia, Mexico as well as UAE (United Arab Emirates). For the organization to pave way for opening eateries in
China, it needs to joint with another fast food chain leader that comes from that region so that they have the ability of managing restaurants in accordance to the country’s culture as well as business regulations (Lanallina, 2013).
Wellings (2013) argues that currently the fast food franchise made a deal of 1,600 stores with a supplementary of a merchant group referred to as Parkson Retail Group whose presence is strongly felt in Asia as a section store chain worker. Parkson Retail will first emphasize on the market of Shanghai and later on expand to other cities of China. Now that Parkson Retail Group owns around 65 stores in China, it cannot find it difficult in creating a foothold in the country. The main rivals of the Parkson Retail Group, Subway have around 2,200 units in this region and this approves that Asians like the sandwiches that are made by Subway (Wellings, 2013). Therefore, the strategy of Quiznos is to team up with Parkson to result in success.
Inside Retail Asia (2015, April 7). Quiznos China plans 1500 stores. Inside Retail Asia.
Lanallina, Marc. (2013, March 15). China’s Top 6 Environmental Concerns. Live Science.
Wellings, Cathy. (2013, June 24). Doeing Business in China – cultural consideration for HR. HRZone.
Ybanez, Alvin. (2016, July 9). Foreign Companies Now Allowed to Invest in China’s A-Share Markets, Says State Regulator. Yibada.