Master of Business Administration (MBA)

By Group 04 Colombo MBA (420)

Assignment 01 International Management

International College of Business & Technology 20th September 2011 317 A, Galle Road,Colombo, Sri Lanka

ACKNOWLEDGEMENT

My earnest endeavour was to complete this assignment not in the sake of doing but to learn something new that I havent experienced. I humbly enjoy the satisfaction of completing this worthy task. Therefore may I take this small note to be a tribute to all those who helped me in numerous ways.

I acknowledge with a deep sense of gratitude the ICBT and all its highly qualified panel of lecturers for the encouragement and advice given and was always a source of motivation. I like to thank our lecturer Mr. for the guidance given to me in completing this assignment. Also I thank University of Wales Institute, Cardifffor offering International Management for our Master of Business Administration and guiding us through out.

And thanks to all our friends who have helped who me in many ways!

Master of Business Administration (MBA)

EXECUTIVE SUMMARY

We have selected one of the biggest confectionary manufactures in Sri Lanka, which we will refer to as ABC Company. ABC Company was a small manufacturing firm engaged in biscuit manufacturing in the 1970s but now it is the largest biscuit, cake and chocolate manufacturers in Sri Lanka. Throughout the journey ABC has diversified into a leading business group in the country an one of major remarkable major strength that can be observed is the leadership of the chairman and the director board. Under the farsighted corporate leadership of the company, ABC has aggressively expanded its operation, and achieved a dominant market share in its all major product categories and also invested heavily in new plants, factories, technologies in order to sustain and improve current level of aggressive market performance of the Company. The ABC Group name itself is becoming a trusted brand for quality in Sri Lanka and is a definite strength for the group to achieve crowning success. Well established sales and distribution network is another strength together with 400 dealer network and products available over 80,000 sales outlets island wide. Furthermore the company has close ties with international distributors in India and Singapore. ABC Companys products are dominating the market and are in price competition with rivals in the market. One of main strategies adopted by the company to face the industry challenges is high volume and low profit margins strategy. The Company is continuously capturing market share of competitors by innovation and product diversification. ABC has also selected backward integration in its value chain to strengthen its position as a low cost product and well as selected technology to give its competitive advantage over rivals. This shows ABCs strengths, and opportunities. In the following report, our group has discussed about ABC Company expanding its business across to the Republic of China. We have considered both Macro and Micro economic factors together with current Global events which will influence ABC Company on going global.

International Management, UWIC/MBA/ MT/ 04/ Group A

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Master of Business Administration (MBA)

Table of Contents ACKNOWLEDGEMENT .............................................................................................................. 2 EXECUTIVE SUMMARY ............................................................................................................ 3 1. 2. 3. 4. Introduction ............................................................................................................................. 5 Current Market Strategy ......................................................................................................... 6 Present Performance of the Company.................................................................................... 6 Prevailing Global Events favourable for ABC Company for going to China ........................ 6 4.1 5. Motivators for Internationalization to China.................................................................... 7

Key Challenges that the company will face in going into Chinese Market ............................ 7 5.1 Entry to Chinese Market .................................................................................................. 7

6. 7. 7.1 8.

Political Factors ...................................................................................................................... 7 Economic Factors.................................................................................................................... 7 Infrastructure ........................................................................................................................ 8 Socio - Cultural Factors .......................................................................................................... 8 8.1 Language and Communication issues .............................................................................. 8

9. 10.

Technology ............................................................................................................................. 8 Legal factors......................................................................................................................... 8 Intellectual Property Issues ........................................................................................... 9 Impact of Financial Factors .......................................................................................... 9 Import of Food Products to China ................................................................................ 9

10.1 10.2 10.3 11. 12. 10.

Conclusion ........................................................................................................................... 9 References .......................................................................................................................... 11 Appendix A ........................................................................................................................ 12

Product Portfolio ....................................................................................................................... 12

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Master of Business Administration (MBA)

Our Group has selected Marketing as one of the Management functions for the discussion. We will be focusing our discussion on marketing of food product in the Republic of China while taking into consideration the influences created by current Global events. 1. Introduction The Vision of ABC Company Ltd is to become leader in confectionary business in South Asia with a global presence and recognition. As a privately owned company, ABC Company Ltd has no clear explicit mission. Instead what the company does is adapting set of market objectives, like increasing market share of a certain brand by some percentage for achieving easy year. Today ABC Company Ltds core business is food manufacturing and initially it was limited to biscuit manufacturing. Then ABC Company Ltd moved into manufacture of confectionary, wafer biscuits, instant jelly

The ABC Group name itself is becoming a trusted brand for quality in Sri Lanka and is a definite strength for the group to achieve crowning success. Well established sales and distribution network is another strength together with 400 dealer network and products available over 80,000 sales outlets island wide. Furthermore the company has close ties with international distributors in India and Singapore. ABC Companys products are dominating the market and are in price competition with rivals in the market. One of main strategies adopted by the company to face the industry challenges is high volume and low profit margins strategy. The Company is continuously capturing market share of competitors by innovation and product diversification. ABC has also selected backward integration in its value chain to strengthen its position as a low cost product and well as selected technology to give its competitive advantage over rivals. This shows ABCs strengths, and opportunities.

Please refer Appendix A for Companys awards and Product Portfolio.

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2. Current Market Strategy It can be observed that ABC Company group is following two generic strategies viz; costleadership and diversification of its product and business. The company relies heavily on advertising for position in the target market segments and widening the market share of products. Seeking opportunities in new market is also being done. This is where the Company is looking forward to expand its operations in the Republic of China. 3. Present Performance of the Company One of ABC Companys cake brand is having over 75% market share and this has been achieved due to superior hygienic conditions. There is a threat of other Global Companies in Sri Lanka entering this market, however presently these companies are not engaging in Chocolate production and marketing in the island. A major threat is the recent import of Indian biscuits to the country 4. Prevailing Global Events favourable for ABC Company for going to China
Recently, the Chinese and Sri Lankan Governments have signed agreements for various business and this would be a positive side to expand the Companys market operations in China. Asia Pacifica Trade

Agreement (APTA) is a window into the massive Chinese market. Under APTA, China is provides duty reductions for about 1,700 items. Current major imports are basically coir, fibre, rubber and rubber products and tea. This is clearly shows that ABC Company has a higher potential in breaking into Chinese market with a cost leadership advantage by having a low cost base through duty reduction.

In addition to this, we believe that ABC Company has Sri Lankas Demand Conditions favourable for its new venture to China Food Industry in Sri Lanka is highly demanding - consumers are highly demanding and require high standard (taste conscious) ABC Company has reached a saturation - going to China is a strategy for improving growth potential

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Based on Learning Curve, knowledge and experience in operating in the Sri Lankan market will add value ABCs current experience in the international market and market diversification strategy is another influencing factor to venture into China .

4.1

Motivators for Internationalization to China

Lack of competition in China and business growth, market development opportunities and the economy perceived to be stable act as a motivator to enter into China. Growth and market development opportunities in cities like Shanghai, Bejing, Guanzhou, Shenzhen and Tianjin based on proximity to major local markets, strong economies and flexible administration. The growing number of new middle-class consumers and their increasing wealth is another motivating factor. 5. Key Challenges that the company will face in going into Chinese Market

5.1

Entry to Chinese Market

ABC Company needs to survey the market conditions in China and then come up with the suitable strategy to enter China. In doing so it has to consider the Macro and Micro Economic Environments. 6. Political Factors The impact of Chinas accession to the World Trade Organization is considered a positive factor in business environment. Understanding of Political structure is very important in doing business with China, The State Council is at the highest level where policies are based on Communist Partys ideology and principles. 7. Economic Factors China is currently the third largest economy and stated to be the worlds largest economy and by 2025. The GDP has been growing at 10% per annum for the past 3 decades. Banking procedures and repatriation of funds from China are impacted by Archaic and complex finance/banking rules and
regulations. Business need to create strategic plans considering both macro and micro environmental
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conditions. The Company needs to consider about the networks, local customers and also need to develop contingency for exit plan to ensure a successful market entry. China is the worlds third largest country, and has 9.6 million square kilometers of land (Ernest & Young, 2006) and would be a challenging market for the ABC Company to market its products.

7.1

Infrastructure

ABC Company should consider about which location they select for their business as it would take extra shipping costs in choosing Ports which are further away.

8. Socio - Cultural Factors

A thorough understanding of the Chinese Cultural norms, relating to language, communication and relationship building would reduce lead times and cost associated with establishing local Chinese operations. Cultural preferences of Chinese consumers and their taste preferences should also be carefully considered. ABC Company may face difficulty in Human Resources management. Survey Reports have shown that it is difficult to retain staff and they are constantly on the chase for next job with a Western joint-venture company for higher salary. Also it has been found that Risk taking appetite of businessmen, speed of decision making in a transaction, conflict resolution between partners are all related the culture and the Chinese Culture too has a profound impact on the way business is done in China. For example, relationships (Guanxi in Chinese) are an important element in the success for business in Chinese society. Relationships with business partners, suppliers and vendors and government official are imperative in China. Due diligence is another aspect that is of utmost importance while engaging in China in a business transaction.

8.1

Language and Communication issues

Mastery of Chinese language would be appropriate as opposed to having a translator as it is very common lost in translation circumstances when using a translator. 9. Technology China is highly technological country, ABC Company would have to take into consideration about the technology factors when setting up its business in China. 10. Legal factors Chinese legal system acts as a barrier to business particularly in relation to understanding law, pursuing legal cases and intellectual property protection which is low compared to developed countries. The legal system is completely different to other countries as there is no common law

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system. It is advisable to use a local legal service. The Chinese civil code is underpinned by Soviet principles (Linong, 2006).

10.1

Intellectual Property Issues

Chinas accesses ion to the World Trade Organization (WTO) in 2001 strengthened its legal system to amend its intellectual property law to agree with the WTOS agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), (Economic Analytical Unit, 2005)

10.2

Impact of Financial Factors

The financial system may influence on the Company business in China as the exchange rates, confusing rules and regulations around remitting money and banking procedures dealing with archaic banking systems and repatriation of profit issues. The Chinese RMB/Yuan utilizes a fixed exchange rate system where the currency was pegged to the US Dollar, and now pegged to basket of hard currencies (Tian 2006) 10.3 Import of Food Products to China

Any food imports to be passed through Chinas State Council or Cabinet, by the Food safety Commission of China which strengthens the countrys food monitoring system. This system includes at least five departments including Health, Agriculture, Quality Supervision, Industry and Commerce administration and food and drug supervision. ABC Company would have to take a note of the Chinese consumer tastes and localize its product accordingly in order to market its products in China. 11. Conclusion

Establishing a business in China presents some unique challenges. The entry mode of business is based on type of business and mostly in the major cities or growth areas of the Special Economic zones, (SEZs). The culture gap plays a major role and also identified as major factor in the success of operations in China. Key Cultural issues include the effect of language and communication on share understanding, modes of relationship building and the cultural acceptance of products in China. The Chinese Legal system plays a major role in both on the

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entry mode and ongoing operations in China. The Chinese currency Yuan, is operating on a floating level plays a major role in import and export of goods. Decision making in the Government is decentralized and is dispersed across various industries. This implies that a company needs to keep track of policies an regulations at all levels.

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Master of Business Administration (MBA)

12. References 1. Deloitte publications on international tax and business guide for China 2. Deloitte report on Doing business with China 3. Department of foreign Affairs and Trade (2008b), Peoples Republic of China country brief December 2007 4. Economic Analytical Unit (2005) Unlocking Chinas Services Sector 5. Economic Intelligence Unit (2010), Country Briefings China Forecast 6. Linonng, Z (2006), China Business: Environment, Momentum, Strategies, Prospectus, Pearson Prentice Hall, Singapore 7. Nielson, A.C Retail Audit, 2010 8. Tian, X (1996), Chinas open door policy in development perspective, Canadian Journal of Developmental studies, Ontario, 17 (1):pp,75-95) 9. http://www.muncheelk.com/ accessed on August 04 2011

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10. Appendix A ABC Company has won several awards giving testimony to excellence of the performance of the company, here are to name a few. Food Award of Excellence in Confectionary Product Brand of the Year for four consecutive years Brand of the Year for two consecutive years (Awarded by Sri Lanka Institute of Marketing) Winner of Gold for Innovative Brand of the Year (Awarded by Sri Lanka Institute of Marketing) Innovative Brand of the Year (Awarded by Sri Lanka Institute of Marketing) Winner of Gold for Industrial Excellence in the Extra Large category at the Annual National Chamber of Industries Achievers (CNCI) Awards Gold Award in the Extra Large Category Exporter Agriculture Value Added Products (Awarded by National Chamber of Exporters)National Award for Export Excellence (Awarded by Ministry of Trade and Commerce

Product Portfolio Biscuits & Wafers Cakes and Swiss Rolls Chocolates & Specialty Chocolates Natural Fruit Juices in ready to drink packs, Dehydrated Fruits Flavoured Soya Meat Products. Energy Foods and Herbal Foods Canneries

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China Population: 1,338,612,968 (#1) Age structure : 0 - 14 yrs: 20% - 15 - 64 yrs: 72% - 65 yrs and over: 8% Labour force population : Agriculture: 40% - Industry: 27% - Services: 33% Median population age : Total: 34 yrs Male: 34 yrs Female: 35 yrs GDP Purchasing power: $8.767 trillion (#3) GDP Per capita : $6,500 (#127) Primary languages spoken : Standard Chinese or : Mandarin (Putonghua, based on the Beijing dialect), Yu (Cantonese), Wu (Shanghainese), Minbei (Fuzhou), Minnan (HokkienTaiwanese), Xiang, Gan, Hakka dialects Internet users : 298 million (#1) Cellphone users 634 million (#1)

BRIC Development indicators Indicator Brazil Russia Population (2009) 194 mil 141mil GDP(US$2009) 1,573bil 1,232bil GDP per Capita $10,499 $14,913 GDP Ave growth rate (1990-2009) 2.5% 0.3% GDP projected Ave growth rate 4.2% 4.5% (2011-14 as of April 2011) Merchandize export 153bil 303bil HDI % change (1990-2010, for 7.6% 3.8% Brazil only 2000-2010) Source : Global Sherpa, 2011 (www.globalsherpa.org)

India 1.15 bil 1,310bil $3.015 6.3% 8.1% 162bil 33.3%

China 1.33 bil 4,985bil $6,778 10.1% 9.5% 1,201bil 44.2%

This hub discusses some of the common elements in a research proposal. Whether you are doing quantitative or qualitative research, it is important that you outline the reasons why you propose doing the study and what process or procedures you will follow to complete the proposed study. Some of the important parts of a good quantitative or qualitative research proposal include:

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1. Determining the general topic; 2. Performing a Literature review on the topic; 3. Identifying a gap in the literature; 4. Identifying a problem highlighted by the gap in the literature and framing a purpose for the study; 5. Writing an Introduction to the study; 6. Framing research hypotheses and or research questions to investigate or guide the study; 7. Determine the method of investigation 8. Outline the research design 9. Define the Sample size and the characteristics of the proposed sample; 10. Describe the procedures to follow for data collection and data analyses.

Determine a General Topic

The first step in writing an academic research proposal is to idenitfy a general topic or subject area to investigate. Usually this first point is the easiest because the research proposal will be tied to the overall theme of a course. In such a case, the the general subject for investigation is normally determined by a professor who is leading the class, the school's department chair, or academic advisory committee.

Perform a Literature Review

The next step is to read as much literature on the general subject matter as time will allow. While you read the literature it is advised to take copious notes and then summarize the purpose and findings of each study relevant to the general subject matter of the eventual research proposal.

Identify a Gap in the Literature

The general purpose of the literature review is not to have notes on a whole bunch of different journal articles and books on a particular subject. The purpose is to understand what studies have already been done on the subject and then to identify any glaring gaps in the literature. Identifying gaps in the literature will open up opportunities to add to the body of knowledge within the general subject area. For instance, both Kimura and Coggins found that servant leadership is actively admired and taught in the Cambodian Christian community which makes up only a small percentage of the Cambodian

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population. However, no one has yet investigated attitudes towards servant leadership in the nonChristian Cambodian community which makes up over 90% of the population. This is an obvious gap in the literature.

Identify a Problem and Frame a Purpose Statement

After you have performed the literature review and hopefully identified an obvious gap in the literature, next you need to identify a problem related to the gap and frame a purpose statement as to why you are investigating what you propose and why other should care about the study. If your readers cannot answer the question so what? Or your answer the question why should I care? Then it may be interesting to you, but not relevant to anyone else.

Write an Introduction
After you have identified a pertinent problem and framed a purpose statement, then you need to craft an introduction. Among other things, the introduction to the proposal will include

The Problem Statement A brief summary of the literature A brief description of the gap in the literature A Purpose statement as to why you are proposing the study and why others should care about the subject matter tied to your research proposal.

Determine Research Hypotheses and or Reseach Questions

Next, you need to identify and craft carefully defined research hypotheses and or research questions. Research hypotheses identify what you are actually going to investigate and what you expect to find from your research study. Research hypotheses are normally found in quantitative research proposals which compare differences and/or relationships between independent variables (or causes of phenomena) and dependent variables (or the effects that result from causes). Research questions are normally found in qualitative research studies. Most importantly, in good academic writing, research hypotheses and questions must be informed or flow from the literature review.

Determine the Method of Investigation

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Master of Business Administration (MBA)

The method section is the second of the two main parts of the research proposal. In good academic writing it is important to include a method section that outlines the procedures you will follow to complete your proposed study. The method section generally includes sections on the following:

Research design; Sample size and characteristics of the proposed sample; Data collection and data analysis procedures

Determine the Research Design

The next step in good academic writing is to outline the research design of the research proposal. For each part of the design, it is highly advised that you describe two or three possible alternatives and then tell why you propose the particular design you chose. For instance, you might describe the differences between experimental, quasi-experimental, and non-experimental designs before you elaborate on why you propose a non-experimental design.

Determine the Sample Size and the Characteristics of the Sample

In this section of your research proposal, you will describe the sample size and the characteristics of the participants in the sample size. Describe how you determined how many people to include in the study and what attributes they have which make them uniquely suitable for the study.

Determine the Data Collection and Data Analysis Procedures

The last section highlighted in this hub is the data collection and analysis procedures. In this section you will describe how you propose to collect your data e.g. through a questionnaire survey if you are performing a quantitative analysis or through one-on-one interviews if you are performing a qualitative or mixed methods study. After you collect the data, you also need to follow a scheme as how to analyze the data and report the results. In a quantitative study you might run the data through Excel or better yet SPSS and if you are proposing a qualitative study you might use a certain computer program like ATLAi. to perform a narrative study or grounded theory study that exposes the main themes from the proposed interviews.

Other Hubs on Writing

How to Right a Proposal for a Grant How to Write a Proposal 4 Guide Questions

International Management, UWIC/MBA/ MT/ 04/ Group A

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Master of Business Administration (MBA)

Writing in the Third Person

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Assignment 01