International Business Programme Introduction to International Business Disclaimer: The information furnished in this report is purely for academic purposes and in no way does it reflect the firm’s position in reality. Prepare by Jason Word Count: 2018 excluding references Table of Contents 1. Introduction 3 2. Findings 4 2. 1 Briscoes Homeware 4 2. 1. 1 Company Background and Current Operations 4 2. 1. 2 Reasons for Expansion 5 2. 2 Target Market Selection 6 2. 2. 1 Aspects of Business Environment in China 6 2. 2. Comparison of China and Japan 7 2. 3 Entry Mode Selection 8 2. 3. 1 Comparison of Entry Modes 8 3. Conclusion 10 1. Introduction The main scope of this report is based on the current position of Briscoes Homeware and the economy environment of Asian countries.
Also entry methods of foreign investment are being analysed for the choice of entering a foreign market. Recommendations based on personal point of view were stated for Briscoes Homeware in order to avoid risks of foreign investment. 2. Findings 2. 1 Briscoes Homeware *2. 1. * Company Background and Current Operations 2. 1. 2 Reasons for Expansion 2. 2 Target Market Selection 2. 2. 1 Aspects of Business Environment in China In China, Chinese concept of “Face” has something to do with the image or credibility of the person to dealing with.
People should never, insult, embarrass, shame, yell at or otherwise demean a person. In ancient times, a Chinese warrior chief, after losing a battle, may commit suicide because he has lost face. While this may no longer occur, the concept of “face” remains alive and well in China.
Awareness of face and its impact is an extremely important cultural issue. 2. 2. 2 Comparison of China and Japan 2. 3 Entry Mode Selection 2. 3. 1 Comparison of Entry Modes Exporting is the marketing and direct sale of goods in foreign country, which is a traditional way of approaching foreign markets.
It offers a company the complete control over production to reach the target market with a low-cost initial investment. In contrast, the low-cost manufacture and high cost of transport or tariff might create a barrier for products exporting.
Franchising is an independent operator buying an existing business from the owner to gain the right to distribute its products, techniques, and trademarks in a particular way that required by the franchisor. It could cause difficulties to the franchisor to monitor the operational activities and procedures of a foreign franchisee. A wholly owned subsidiary refers to a firm as the foreign investors own 100 percent of its shares. Entering a wholly owned subsidiary requires knowledge of foreign management with high risk and commitment.
It can help the firm to avoid problems of integration and retain full control of its operation. 2. 3. 2 Selected Entry Mode Justification 3. Conclusion 3. 1 Summary Briscoes Homeware is one of the largest retailers in home ware appliance in New Zealand. The revenue and profit are under the negative effect of the financial crisis since 2008. China is the most appropriate place for its expansion as the target market since the large population as the potential consumer, and the low labour cost as the clear advantage over Japan.
After comparison of several entry methods for Briscoes Homeware to set up business in a foreign market, joint venture would be more appropriate than other entry modes. The knowledge of local environment and the business linkage are the main advantages of Briscoes Homeware to form a partnership with local firms. 3. 2 Recommendations In China, even the living standards have improved substantially; the incomes and consumption of average household still remain quite low in rural areas.
Urban areas with higher purchase power of potential customers would be the ideal location of Briscoes Homeware to set up new stores. Choose the right partner is the key factor of success in a joint venture. Collecting information of candidates’ linkage and experience in local business environment should be carried out as well as examining their distribution network and facilities. Before Briscoes Homeware makes the decision to choose a suitable partner, certain period of time is required to conduct the research on local firms. 4. References
Briscoe Group Ltd. (2009). Director Profiles. Retrieved July 11, 2009 from http://www. briscoegroup. co. nz/content. asp? cont=directors Briscoe Group Ltd. (2009). Annual Report: For the Period End 25 January 2009. Retrieved July 11, 2009 from http://www. briscoegroup. co. nz/documents/BR2590%20Ann%20Report%2009%20V10. pdf Dallas, N. (2007). How to Do Business in China: 24 Lessons in Engaging the Dragon. NSW: McGraw-Hill. McGregor, J. (2005). One Billion Customers: Lessons _From the Front Lines of Doing Business in China_. New York: Free Press.