The introduction of this paper as well as the summary and the scope of work are drawn in the first chapter. Chapter 2 deals with the definition and relevance of the problem and outlines the research methods that are applied in this work. The third chapter is composed of the theoretical background for the subsequent case. For this reason chapter 3.1 gives an overview of the relevant market entry strategies. Afterwards an analysis of the selected market entry strategy that is relevant for the case - the joint venture - is given in chapter 3.2. This analysis is subdivided in three areas: a definition (3.2.1), the explanation of different variations of this market strategy (3.2.2.) and finally a critical comment in chapter 3.2.3 which includes a comparison of its advantages and disadvantages. In chapter 3.3 relevant theories for market entry barriers will be introduced. Porters Industry analysis will be described in chapter 3.3.1. Afterwards, the SWOTanalysis, its origin and elements will be explained generally in chapter 3.3.2 and Hofstedes cultural value dimensions will be outlined in chapter 3.3.3. Out of these theories the selected elements for the case part will be illustrated in chapter 3.4. First, the SWOT analysis will be explained in detail in chapter 3.4.1. For this reason the selected market entry barrier elements will be outlined. Again this chapter is sectioned into three parts: a detailed definition of the SWOT elements weaknesses (3.4.1.1) and threats (3.4.1.2) is given, its use is clarified afterwards (3.4.1.3) and a critical comment is drawn finally (3.4.1.4). The elements of Hofstedes cultural value dimension are analysed the same way as the theoretical elements of the market entry strategy and elements of the SWOT analysis. First, all selected dimensions will be defined. Chapter 3.4.2.1 is concerned with Power Distance, followed by the dimensions of Uncertainty avoidance (3.4.2.2) and Individualism versus Collectivism (3.4.2.3.). This definition will be closed with the last dimension: Long-Term orientation in chapter 3.4.2.4. In the following there will given be a critical comment on Hofstedes theory in chapter 3.4.2.5. After the theoretical background is outlined in chapter 3, chapter 4 is concentrated on the case part and the application of the discussed theories and methodologies into a practical environment.
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Table of Contents
1. Introduction
1.1. Executive Summary
1.2. Scope of work
2. Problem definition and Research methods
2.1. Definition of Problem
2.2. Reasoning and Motivation
2.3. Research methods
2.3.1. Primary Research
2.3.2. Secondary Research
2.3.3. Methods used in Thesis
3. Theories
3.1. Relevant theories for market entry strategies
3.1.1. Export
3.1.1.1. Indirect Export
3.1.1.2. Direct Export
3.1.2. Licensing
3.1.3. International Franchising
3.1.4. Joint Ventures
3.1.5. Overseas branches and factories
3.1.6. Subsidiaries
3.2. Selected theory for market entry strategy
3.2.1. Definition of joint ventures
3.2.2. Types of joint ventures
3.2.2.1. Equity joint ventures
3.2.2.2. Contractual joint ventures
3.2.2.3. X-joint ventures and Y-joint ventures
3.2.3. Critical comment on joint ventures
3.3. Relevant theories for market entry barriers
3.3.1. Porters Industry Analysis
3.3.2. The SWOT analysis
3.3.3. Hofstedes cultural value dimensions
3.4. Selected theory elements for market entry barriers
3.4.1. Elements of SWOT analysis
3.4.1.1. Weaknesses
3.4.1.2. Threats according to Porter
3.4.1.3. Use of SWOT analysis
3.4.1.4. Critical comment on SWOT analysis
3.4.2. Elements of Hofstedes cultural value dimensions
3.4.2.1. Power Distance
3.4.2.2. Uncertainty Avoidance
3.4.2.3. Individualism versus Collectivism
3.4.2.4. Long term-orientation versus short-term orientation
3.4.2.5. Critical view on Hofstedes cultural value dimensions
4. Case
4.1. Economic area China: a framework
4.1.1. Geographical Factors
4.1.2. Social Factors
4.1.2.1. Population
4.1.2.2. Education
4.1.2.3. Cultural and religious structure
4.1.3. Legal factors
4.1.3.1. Political Circumstances
4.1.3.2. Economic System
4.1.4. Description of the Chinese market
4.1.4.1. Market Development
4.1.4.2. Purchasing Power
4.1.4.3. Trends of the energy market
4.2. Application of Relevant Theory elements onto Case
4.2.1. Definition
4.2.2. Joint Ventures in China as market entry strategy
4.2.3. Elements of SWOT analysis
4.2.3.1. Weaknesses
4.2.3.2. Threats according to Porter
4.2.4. Elements of Hofstedes cultural value dimensions
4.2.4.1. Power Distance
4.2.4.2. Uncertainty Avoidance
4.2.4.3. Individualism versus Collectivism
4.2.4.4. Long-term orientation versus short-term orientation
5. Conclusion, Outlook and critical Comment
5.1. Conclusion
5.2. Outlook
5.3. Critical Comment
Research Objectives and Themes
This thesis aims to identify and analyze market entry barriers within the Chinese economy to assist companies in optimizing their market entry strategies and increasing the likelihood of successful ventures.
- Analysis of diverse market entry strategies (Export, Licensing, Franchising, Joint Ventures, Subsidiaries).
- Application of the SWOT analysis to assess internal weaknesses and external threats in the Chinese market.
- Examination of Hofstede's cultural value dimensions to address behavior-based entry barriers.
- Evaluation of China's economic and political framework, including the significance of "Guanxi" and local partnerships.
- Investigation of protectionist barriers and the evolving role of FDI in China.
Excerpt from the Book
3.1.1.1. Indirect Export
Indirect export is characterised through the interposition of intermediaries in the host market to sell goods. This means there is only an indirect business connection between the producing company and the end consumer. As shown in figure 4 the exporting company provides its goods either to an inland foreign trade company or inland indent house that execute the export business.
One advantage of indirect export is the reduction of risks. Neither the company has to establish an own exporting department and handle the exporting process itself nor has to deal with the risks. For instance the exchange rate fluctuation and the marketing of the products are up to the responsibility of the intermediate company. The import houses are often specialised either in countries or industries and therefore are imbued with market and customer proximity. Therefore the exporting company does not need to acquire this knowledge itself.
Due to these advantages, market entry through indirect export consumes only little resources.
Nevertheless, in the long-term view, it admittedly leads to decreasing profits as the intermediate company expects a certain amount of money for their service. The exporting company is furthermore not able to improve its market skills about competitors and substitutes. Any learning that takes place through this internationalisation stays indirect. By reason of the missing of a direct customer relationship it is also very difficult for the company to customize its product onto the host market and serve customers needs directly.
Summary of Chapters
1. Introduction: This chapter introduces the topic of market entry barriers and outlines the scope and objectives of the thesis.
2. Problem definition and Research methods: The chapter defines the core problem of entering foreign markets and describes the primary and secondary research methods applied.
3. Theories: This section provides the theoretical foundation, detailing various market entry strategies, SWOT analysis, and Hofstede's cultural dimensions.
4. Case: The chapter applies the previously discussed theories to the specific economic environment of China, focusing on its market characteristics and entry barriers.
5. Conclusion, Outlook and critical Comment: The final chapter summarizes the findings, provides an outlook on future developments in China, and offers a critical reflection on the applied theories.
Keywords
Market entry strategies, China, Joint Ventures, SWOT analysis, Hofstede, cultural value dimensions, market entry barriers, Foreign Direct Investment, Guanxi, globalization, economic development, business environment, international management, protectionism, competitiveness.
Frequently Asked Questions
What is the primary focus of this thesis?
The work focuses on identifying and analyzing market entry barriers for companies planning to expand into the Chinese market to optimize their entry strategies.
What are the central thematic fields covered?
The thesis covers international market entry strategies, strategic management tools like SWOT and Porter's Five Forces, and cultural dimensions as described by Geert Hofstede.
What is the primary research objective?
The objective is to sensitize companies to potential problems and barriers in the Chinese market to improve the success rate of their international ventures.
Which scientific methods are utilized?
The author uses a combination of secondary research (literature, reports) for theoretical foundations and qualitative primary research (expert interviews) for the case study application.
What is discussed in the main part of the work?
The main part encompasses an analysis of market entry strategies, a theoretical overview of barrier assessment models, and a comprehensive practical application of these models to the Chinese economic and cultural environment.
Which keywords characterize the work?
Key terms include market entry strategies, China, Joint Ventures, SWOT, cultural dimensions, FDI, and Guanxi.
Why is a Joint Venture often favored in the Chinese market?
Joint Ventures are often encouraged or even required by the Chinese government to facilitate technology and management know-how transfer, and they are typically supported by tax incentives.
What role does "Guanxi" play in the Chinese business environment?
Guanxi refers to the importance of interpersonal relationships and networks, which are crucial for establishing trust, securing licenses, and successfully conducting business in China.
- Quote paper
- Elisabeth Bilewicz (Author), 2006, The optimization of market entry strategies focused on market entry barriers in China, Munich, GRIN Verlag, https://www.grin.com/document/67680
