ARTS 1110 Study Guide - Midterm Guide: Major Appliance, Product Bundling, Profit Margin

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taupellama687

24 Jan 2018

School

University of Manitoba

Department

Arts Interdisciplinary

Course

ARTS 1110

Professor

Lisa K.Soiferman

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Document Summary

Samsung wants to enter chinese market and flagship product will be coloured tv. In 1995, gdp is low but growing fast. There is a huge potential demand for tv. A large number of chinese firms sell tv but small screen and not large screen. Urban areas are concerned with the brand name while rural areas are more about reasonable price. In high end japanese firms are already established in urban areas. Chinese production will be mainly for chinese market. Issues that we need to handle in this case: There are three major strategies: differentiation, cost leadership, focus differentiation or cost leadership. Pricing strategies is very important low, medium, and high pricing. Usp to carve a space in the market. Answer: focus differentiation is the most appropriate strategy. Cost leadership is not a good idea because we do not have any sales volume right now. If we do it, over all profit margin would be low as in case of us.

Related Questions

After reading the case that is below, how can a foreign company entering China ensure that it tackles the most important little things that end up being huge barriers to success as we approach the year 2020 when China is expected to have significantly increased purchasing power among its middle class? Write your opinion, as a manager, on how to face cultural issues like those described in the case, when entering foreign markets.

The People's Republic of China opened up to foreign investments in the late 1970s. Since that time, numerous companies have tried to establish operations and sell their products to customers in China. Many more companies will try in the years to come China is expected to have some 190 million people in the middle- and upper-income categories by 2020. This is an increase from only about 17 million people in these income brackets as recently as in 2010. China's purchasing power for virtually all products and services has strong potential, and foreign companies will seek these market opportunities. What have we learned culturally that can help Western-based companies in China's marketplace?

Some background on China can serve as a starting point for a better understanding of the culture in China and what some well-known companies such as Best Buy and eBay have done to target the Chinese marketplace. The motivation for many foreign companies to enter China beyond those that have been there for a few decades for reasons of low-cost production was the triple growth of the Chinese economy that was seen from 2000 to 2010. China overtook Japan to become the second-largest economy in the world behind only the United States, and its large population makes for an enormous target market. Investment from foreign companies was the largest driver of China's growth in the decade from 2000 to 2010. However, many companies also increased their exports to China. The United States, for example, saw its companies increase exports to China by 542 percent from 2000 to 2011 (from about $16.2 billion to $103.9 billion), while total exports to the rest of the world increased by only 80 percent in the same time period.

Interestingly, while foreign investments grew, domestic consumption as a share of the Chinese economy declined from 46 percent in 2000 to 33 percent in 2010. This consumption declineâcoupled with slower growth globally and, ultimately, the worldwide economic downturn that started in 2008âraised questions about China's momentum. Right now, around 85 percent of mainstream Chinese consumers are living in the top 100 wealthiest cities. By the year 2020, these advanced and developing cities will have relatively few customers who are lower than the middle- and upper-income brackets by Chinese standards. The expectation is that these consumers will be able to afford a range of products and services, such as flat-screen televisions and overseas travel, making the Chinese customer much more of a target for a wide variety of consumption. This begs the question, can the unprecedented Chinese growth really continue, and would it come from increased consumption?

The resounding answer is yes according to research conducted by McKinsey & Company. McKinsey found that barring another major economic shock similar to what we saw in 2008, China's gross domestic product (GDP) will continue to grow, albeit not at the historic levels seen between 2000 and 2010 when it grew about 10.4 percent annually. The growth from 2010 to 2020 is expected to be about 7.9 percent per year, which is still far above the expected growth for the United States (2.8 percent annually), Japan (1.2 percent annually), and Germany (1.7 percent annually) the three countries among the top four worldwide economies along with China. And, the key is that consumption will now be the driving force behind the growth instead of foreign investment. The consumption forecast opens up opportunities for foreign companies to engage with Chinese consumers who are expected to have more purchasing power and discretionary spending. But culturally translating market success from one country or even a large number of countries to the Chinese marketplace is not necessarily as straightforward as it may seem. Often, a combination of naivety, arrogance, and cultural misunderstanding has led many well-known companies to fail in China. Lack of an understanding of issues such as local demands, buying habits, consumption values, and Chinese customers' personal beliefs led to struggles for companies that had been very successful elsewhere in the world. Let's take a brief look at Best Buy and eBay as two examples.

Best Buy, the mega-store mainly focused on consumer electronics, was founded in 1966 as an audio specialty store. Best Buy entered China in 2006 by acquiring a majority interest in China's fourth-largest appliance retailer, Jiangsu Five Star Appliance, for $180 million. But culture shock hit Best Buy, best described by Shaun Rein, the founder of China Market Research Group. He pointed to a few reasons for this culture shock and lack of success. First, the Chinese will not pay for Best Buy's overly expensive products unless they are a brand like Apple. Second, there is too much piracy in the Chinese market, and this reduces the demand for electronics products at competitive market prices. Third, like many Europeans, the Chinese do not want to shop at huge mega-stores. So, these three seemingly easy-to-understand cultural issues created difficulties for Best Buy. Solving these issues, Best Buy believed that it would have to develop and implement a different business model for the Chinese market than it has used, for example, in the United States. Now, how far should a company go outside its normal business model to adhere to the cultural values and beliefs of a new market? Strategically moving forward, Best Buy opted to close all of its Best Buy branded stores in China and focus on its wholly-owned local Jiangsu Five Star chain of stores. But will this new strategic business model be successful with the new makeup of customers in China expected by 2020?

eBay, the popular e-business site focused on consumer-to-consumer purchases, was founded in 1995. The company was one of the true success stories that lived through the dot-com bubble in the 1990s. It is now a multi-billion-dollar business with operations in more than 30 countries. But China's unique culture created problems for eBay in that market. Contrary to the widespread cultural issues that faced Best Buy, one company in particular (TaoBao) and one feature more specifically (built-in instant messaging) shaped a lot of the problems that eBay ran into in China. Some 200 million shoppers are using TaoBao to buy products, and the company accounts for almost 80 percent of online transaction value in China. Uniquely, TaoBao's built-in instant messaging system has been cited as the main reason for its edge over eBay in China. Basically, customers wanted to be able to identify a seller's online status and communicate with them directly and easily function not seamlessly incorporated into eBay's China system. Clearly, built-in instant text messaging is a solvable obstacle in doing business in China. It sounds easy now when we know about it, but may not always be the case when we take into account all the little things that are important in a market.

brownox314

Q: Please read carefully and complete requirement number 4 wich is

A)â¨ Summarize your findings and recommendation for future plans.

B)Include a plan to visit the country. Identify travel objectives, key persons with which to meet, activities to experience (related to your industry),

C) travel plans and cost estimate.

Requirements. Note that requirements 1-3 are already answered in the report bellow the requirements section.

The final project for this course is a written International Investment Report. Your company wants you to research a possible investment in a foreign country. Please pick a company and a country for investment.

You must evaluate the industry and country of investment to determine if the current circumstances in the specified country can support a business of your choice. Country evaluation should focus on economic, financial and political risk of the country. Industry structure analysis would look at the regulatory structure as well as the competition in the target country.

The final recommendation would be whether or not to enter the specific country in the designated sector and what should be your entry strategy. The goal of the project is to analyze the prospects for expanding your company into the foreign country.

Main Elements

To gain the full support of management, your report should include, as a minimum, the following content:

1. Introduction:

Describe the basics of the proposal. Identify:

Country basics

Company basics

Purpose of expansion and project specifications

2. Country Evaluation:â¨Describe the country of investment. Include the following:

Economic structure, indicators and risk

Financial structure, indicators and risk

Political structure and risk

Recent history which impacts current conditions and risks

Geography, natural resources and existing industries that impacts current conditions and risks

Overall risk indicators

3. Industry Evaluation:â¨Describe the industry in the country. Include the following:

Regulatory structure

Competition â Major and minor competitors

Local financing options for the expansion

Overall attractiveness of the industry

4. Recommendationâ¨ Summarize your findings and recommendation for future plans. Include a plan to visit the country. Identify travel objectives, key persons with which to meet, activities to experience (related to your industry), travel plans and cost estimate.

Report.

1.Company Basics: The Company, established in 2014, is a user-centric, focuses on the development of electric vehicles with headquarters in Gardena, California.

Industry: Automobiles

Product: Electronic Cars

Purpose of expansion: There are three main elements to consider China as the platform for company expansion:

Project Specifications:

The company can try to invest in China to produce electric cars. It could concentrate on upper class people to market their cars. They can enter into market with some suitable pricing strategies based on market and product that is targeted. Based on the present analysis, the company should manufacture small and affordable which are suitable for china market. The marketer should formulate suitable strategy to market the same.

2. Country evaluation: The basics of China

China is a country which mostly concentrates on the middle class group. China has a lot of manufacturers but very few retailers, and the products sold to the consumers are generally low cost items. Hence, large and international retailers are not able to sell high cost items in China. Therefore, such big foreign retailers lure the consumers with discounts to attract them.

China has a lot of local manufacturers and less retailers. This emerges as a golden opportunity for the foreign retailers. However, the ability to use the opportunity in a right way can only lead to a successful business

Economic structure: As per the reports, Real GDP raised by 6.7% year on year in the first half of 2016, but they expect a slowdown in the second half to lower full-year expansion to 6.6%. Subsequently, the reports revealed that economic growth will slow gradually, to 4.1% by 2020, as the authorities take delayed steps to tackle an unsustainable build-up in debt. Finally, the government's authoritarian behavior and its disappointing progress on market reform indicate the China's weak economic prospects.

Financial Risk: China has a different structure to finance the corporate. It poses challenging elements to get a deal and obtain financing. Companies should be able to showcase a variety of financing options when negotiating business projects in China. The companies should understand and communicate the western financier's perspective and the Chinese official's perspective while negotiating the projects. The companies should maintain a specialist to engage the operations of banking with Chinese banking community.

Political Risk:

There exists a unique type of political risk in China. There is a constant fight between the countryâs central government and other provincial, local governments over the applicable law and observance or non-observance of it. This concept makes the companies to be more cautious about rules of China. So, there is a dynamic political environment in China and the FF Company should be cautious about the political changes and take decision accordingly.

3. Industry evaluation:

Auto industry in China:

The Chinaâs automotive sector is growing at the rate of 24% compounding between 2005 and 2011 and, in 2010. Its growth has dominated the United States new car market which is an attractive point for FF to enter in China auto market. The forecasts of China auto market indicate that there are chances of slowing down the growth rate to 8% a year between 2011 and 2020 but still it could be an attractive one for FF company as the sales forecasts to reach 22 million by 2020 which is bigger than the European or North American markets.

Competition: BYD, Chery, FAW Volkswagen, GAC (Guangzhou Auto), BAIC (Beijing Auto) and Beiqi Foton and others have occupied electric car market in China. But there are still chances for the new players to exploit the market. The Electric vehicles are expected to grow in the A model segment due to increased public environmental awareness and expected government policy initiatives. Two trends are driving the Chinese auto market those are consumers will increasingly choose to buy bigger and more expensive cars. Another point to be focused is that the used-car market in China is growing, a development that could increase new car sales of the lower price segment in particular. Emerging urban alternatives such as improved public transportation, increased availability of car rentals and sharing could change the consumer behavior and could influence the auto market segment in China. The estimations say that by 2020, 20 Chinese cities will exceed this car-density threshold. The Chinese automotive structure faces major changes and the industry consolidates as a result of increasing competition.

From my point of view , The Chinaâs automotive sector is growing at the rate of 24% compounding between 2005 and 2011 and, in 2010. Its growth has dominated the United States new car market which is an attractive point for FF to enter in China auto market. The forecasts of China auto market indicate that there are chances of slowing down the growth rate to 8% a year between 2011 and 2020 but still it could be an attractive one for FF company as the sales forecasts to reach 22 million by 2020 which is bigger than the European or North American markets.

So before calculating the travel costs it is important to understand that China has a different structure to finance the corporate. It poses challenging elements to get a deal and obtain financing. Companies should be able to showcase a variety of financing options when negotiating business projects in China. The companies should understand and communicate the western financier's perspective and the Chinese official's perspective while negotiating the projects. The companies should maintain a specialist to engage the operations of banking with Chinese banking community.

4. ??

carminegnat140

Analysis of perfect world competition strategy and contribution of technology to trade

I. Analysis of the strategic competition of the perfect world enterprise

1. Perfect World Film and Television Product Competition Strategy

First of all, in the domestic market, the strategy of perfect world film and television is a diversification strategy. Focus on decentralized investments, including TV dramas, movies, and variety shows. His works satisfy the needs of the audience and are full of positive energy. Therefore, he won the Five One Project of the Central Propaganda Department and the Flying Award of the Chinese TV series, which made the perfect world gain a good reputation in the industry and benefit the long-term business. development of. At the same time, further expand to invest in the production of high-quality variety shows, such as "Extreme Challenge", "cross-border song king", "cross-border comedy king" and so on.

Perfect World Film and Television utilizes the Blue Ocean Strategy to invest in the small-cost film market, investing in "Steel's Piano", "Love for Love 33 Days", "Watching the Wind", "Let's Get Married", "Extraordinary Tasks", "Carnival" Other films, including "Love for Love 33 Days", became the biggest box office dark horse in the 2011 movie market with excellent box office results.

Secondly, in the international market, the perfect world film and television strategy is a pan-entertainment strategy layout, and further to the internationalization of film and television. Not only has it entered into a single investment and strategic cooperation agreement with Universal Pictures, a famous Hollywood company, but also introduced many foreign films to the Chinese market. The domestic market environment is fiercely competitive, and the perfect world film and television highlights. In the cooperation film list, there are many famous masterpieces: "Too Dark Time", "Phantom Shadow Sewing". In 2017, Perfect World Television entered the Jiaxing Media and led the new round of D-round financing, expansion, and established the perfect Weixiu Entertainment Group.

Summarize the competitive strategy of perfect world film and television. By leveraging the vigorous development of China's cultural industry, based on the cultural boutique strategy, using the influence of brand reputation, and improving the scale, intensification and specialization of the cultural industry, it is a global entertainment company with long-term influence.

II.The contribution of technology to trade

1. The relationship and contribution of technology and trade

First, according to the theory of comparative advantage, the difference in relative costs creates the basis for trade between the two countries. The emergence and development of technology have led to a gap in the production efficiency of products with a small cost gap, which has created a huge cost gap, which has prompted technologically advanced countries to export cheaper products to backward countries, and technology has promoted the expansion of trade scale.

Secondly, the development of international trade has led to the export of many technologies. According to the product life cycle theory, technology in developed countries will be iterated after the maturity period, and the original technology shows a trend of transition to developing countries to obtain more marginal profits. As a result, technology has flowed from the producing countries, and the producing countries have acquired new technologies, and developing countries have thus acquired technology that they cannot develop in their own countries for production. Overall, this has increased the welfare level of countries, reduced the cost of exports, and expanded the scale of trade between countries in the long run.

2.The promotion of technology in the perfect world of film and television

As mentioned above, Perfect World Film and Television has adopted a diversified strategy and reached strategic cooperation with Universal Studios of Hollywood. Both parties will benefit from this. For Universal Pictures, exporting its mature shooting technology to the perfect world, you can use the cheaper labour costs and fixed costs in China to get quality-assured films. For the perfect world, the mature technology of the world can be Helping them to complete the filming of the film better, and also gain a higher profit from the film export. Therefore, the export of film and television technology has promoted the film and television trade between China and the United States.

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ARTS 1110 Study Guide - Midterm Guide: Major Appliance, Product Bundling, Profit Margin

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