...A MODEL OF OPTIMAL INTERNATIONAL MARKET EXPANSION THE CASE OF US HOTEL CHAINS EXPANSION INTO CHINA E. Hachemi Aliouche, Ph.D. Associate Professor, Hospitality Management Whittemore School of Business and Economics UNIVERSITY OF NEW HAMPSHIRE, USA and Udo Schlentrich, Ph.D. Associate Professor, Hospitality Management Whittemore School of Business and Economics UNIVERSITY OF NEW HAMPSHIRE, USA ABSTRACT: Departing from the explanatory and descriptive approaches common in many of the academic studies of international expansion, this paper uses a managerial approach to develop and illustrate a process that can assist managers in the formulation of their international expansion strategies and plans. A comprehensive model of international expansion is outlined and applied to determine the optimal country to be targeted for entry by a US hotel firm and the optimal entry mode to be used. The model consists of three sections. Section One (macro assessment) identifies the major external macroenvironmental variables that determine the risks and opportunities of international expansion: market size, market growth and purchasing power; political, economic, legal and regulatory risks; and cultural and geographic distances. Through macro assessment, countries with the optimal risk/opportunity profiles are identified and ranked. Section Two (micro assessment) is applied to the optimal countries identified in Section One to estimate the potential profitability and financial value created (as...
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...Introduction ABC is company which founded in UK, currently their director want to invest business in either china or US. This paper applies the Throughput Model illustrates how the process of an individual’s decision choice is made Throughput Model pathways Generally, there are six pathways (1) P → D ,(2) P → J → D ,(3) I → P → D, (4) I → J → D ,(5) P → I → J → D and (6) I → P → J → D. They represent psychological egoism, deontology, relativist, utilitarianism, virtue ethics, and ethics of care, respectively. (1) “P → D represents psychological egoism that stresses individuals are always motivated to act in their perceived self-interest.” (Rodgers, Gago 2001) On the one side, in this ABC case, if their director graduate from US and work for couple year in there. Then they will more likely to invest business in US instead of china. Because US and UK have similar accounting system, moreover there will face less communication barrier. On the other side, if this director is Chinese, he knows a lot about china then he will invest business in china because it fits his person desires. (2) “P → J → D depicts the deontology viewpoint that emphasizes the rights of individuals and on the judgments associated with a particular decision process rather than on its choices.” (Rodgers, Gago 2001) This model are rules based, followed by guide lines. ABC company’s decision which place to invest business should vote by board of director. Another important aspect needs to consider...
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...RED LOBSTER MOVES to CHINA? HTM 540, International Tourism Development May 26, 2013 Review key points from Darden Restaurant’s most recent 10-K. Their stock symbol on the NYSE is DRI Darden Restaurants based on company sales, market and the amount of company owned and managed restaurants, is the world's largest casual dining restaurant company who has a variety of dining brands to choose from. Their mission is to be “The best, now and for generations... and a place where people can achieve their dreams” (Darden 10K, 2012). According to their most recent 10-K report (2012), there are many key points for review. “Of the 1,961 restaurants across the United States & Canada none of them are franchised” (Nation’s Restaurant News, 2012, p.1). Domestically Darden doesn’t offer franchise opportunities. However, they do have 28 restaurants outside of the United States operated and independent to third parties. Other key points are company sales and stocks. The total company started out in 1970 with 3.5 million in sales ending with 7,998.7 million, with 9.5% attributing to alcohol, in 2012, showing significant growth. Stock prices were at a high 55.84, low 40.69, and closed at 53.06 per share as of May 27, 2012. Ford Equity research (2013) projects that Darden will perform in line with the market over the next 6-12 months based on key factors such as earnings strength, relative valuation, and recent price movement (para. 1). “To support future growth,...
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...SWOT analysis for Air China The airline industry has undergone significant restructuring in recent years.Airlines, formerly rivals in a highly regulated industry, have become opportunisticseekers of co-operation. In today's world, mega-carriers and small airlines areworking together rather than competing with one another. Forms of co-operation include sub-contracting, code sharing, franchising and theformation of global marketing networks. Such alliances allow firms to focus on their respective core competencies, while drawing the benefits of scale economies. In essence,co-operation among rivals has led to increased competitiveness. This has accelerated thetrend of joint marketing, and the airline industry has become characterized by the desireto belong to a global network. The tendency has been to strive for a global presence. The case of Air China Air China was founded on the 1st of July 1955. Its headquarters is based in Beijing. Itengages in international and domestic passenger and cargo flight services. To unify itsfacility image and simplify its repairs and maintenances, its fleet of 118 aircraftexclusively consists of Boeing models. It has established hub-spoke style passenger andcargo transport network. The hub of this network is Beijing International Airport.The company is operating 339 routes, which consists of 53 international and 286domestic, operating more than 1,000 scheduled flights on weekly basis, serving 29 citiesin 19 countries. About 66 per cent of its...
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...After the 1949 Chinese Revolution, in which Mao Zedong the leader of the Communist Party, attempted to implement his vision of a modern industrialized China. The Party won the support of the peasants, the largest class of people in China, as they were the first government party to try and improve peasant’s lives. Before the victory of the revolution, the Party focused on improving the lives of peasants by giving them land and an education. But after they gained power, the needs of peasants was no longer their focus as the Party was focusing on the rest of the country. The Chinese Communist Party represented the needs of peasants but not their independence, choices or wishes. The Communist Party gave the peasants land, but when the focus of...
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...Chipotle Mexican Grill, Inc. in Beijing, China Goal The goal of the well-known fast food restaurant chain, Chipotle Mexican Grill, Inc., is to introduce the franchise to a brand new market, Beijing, China. The market is totally different for many perspectives, such as Asian culture and different customer base. It will be very important and challenge to find effective ways to attract dinners. Hence, Chipotle Mexican Grill, Inc. has to build and promote a new definition for fast food, which is healthy. People in Beijing, China become more and more pay attention to the food they eat and whether it is safe and healthy. The developing process will definitely not be easy, so the corporation needs to seek ways to overcome all the possible barriers and problems it may happen in the future. The ultimate goal is to survive and to be successful in the new market, and slowly and stably expand franchises in Beijing, China, and growing 15 percent of the market share within one year. Introduction Chipotle Mexican Grill, Inc. is a fast food restaurant chain that was founded by Steve Ells in 1993. Ells used his father’s loan, $85,000, to open the first Chipotle restaurant in Denver, Colorado. It became a huge success by selling over 1,000 burritos a day. The second store opened two years later, also in Colorado. The father of Ells invested $1.5 million, and then Ells used the funds to expand Chipotle by creating a board of director and business plan. In 1998, McDonald’s made a small...
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...China, Jamaica, and America Ethics Case Study Tammy M Langewisch Eth/557 December 3, 2012 Andrew Sargent, MBA, JD China, Jamaica, and America Ethics Case Study In the article, “A Study of Differences in Business Ethical Values in Mainland China, the U. S. and Jamaica,” writes about the results of a second research performed that compares what has been considered third world countries, Mainland China and Jamaica, to the United States (U. S.), and how each countries culture impacts ethical decision making in businesses. The study contained five vignettes and two hypotheses. The vignettes were scenarios in which the subjects responded to, according to what they believed were ethical or those that were not. This paper will cover the culture that impacts China and Jamaica, the results of the research and ethics plays a role in decision making for financial, environmental, and cultural issues; how the concepts of positive and normative economics are reflected; and how market efficiency, economizing, and the market system affects these ethical issues in each country compared to the U. S. Ethics in Financial, Environmental, and Cultural Issues Mainland China was a socialist-based economy that converted to free market over 25 years ago. China’s culture is founded upon Confucian and Maoist, rather than capitalist, which impacts ethical decisions made by Chinese business leaders (Fok, Hartman, & Kwong, 2005). Jamaica’s heritage is capitalist and it is a low uncertainty...
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...SWOT analysis for Air China The airline industry has undergone significant restructuring in recent years.Airlines, formerly rivals in a highly regulated industry, have become opportunisticseekers of co-operation. In today's world, mega-carriers and small airlines areworking together rather than competing with one another. Forms of co-operation include sub-contracting, code sharing, franchising and theformation of global marketing networks. Such alliances allow firms to focus on their respective core competencies, while drawing the benefits of scale economies. In essence,co-operation among rivals has led to increased competitiveness. This has accelerated thetrend of joint marketing, and the airline industry has become characterized by the desireto belong to a global network. The tendency has been to strive for a global presence. The case of Air China Air China was founded on the 1st of July 1955. Its headquarters is based in Beijing. Itengages in international and domestic passenger and cargo flight services. To unify itsfacility image and simplify its repairs and maintenances, its fleet of 118 aircraftexclusively consists of Boeing models. It has established hub-spoke style passenger andcargo transport network. The hub of this network is Beijing International Airport.The company is operating 339 routes, which consists of 53 international and 286domestic, operating more than 1,000 scheduled flights on weekly basis, serving 29 citiesin 19 countries. About 66 per cent of...
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...UGEA Chinese Society Chin Tse Kai 1155056381 Dr. Hua Guo Case Study 1. Introduction Maotanchang High School is a cramming school located in Maotanchang town, Lu An city of Anhui Province in China. Despite the prosperous cities like Shanghai or Guangzhou near the coast, Maotanchang town is in the middle of China, inside foot hills of Anhui. Maotanchang town did not enjoy the economic growth of China’s opening economy, but instead, it specialised in becoming a Gaokao cramming town. 2. What make Maotanchang a cram city? 2.1 Inland Cities’ Inherited Disadvantages In 1979, Deng Xiaoping established several economic special zones in coastline cities of China, including Shanghai and Guangzhou. These cities, has become some of the richest cities in China. And their open economy and advantageous geographic position plays a big role. But small towns like Maotanchang didn’t enjoy much of the opening of China economy. According to The Economists, Anhui’s GDP is only equivalent to Pakistan, while Shanghai’s GDP is equivalent to Finland. The poor location Anhui province is in and the lack of labour, infrastructure facilities made these inland cities hard to enjoy the same growth as coastal cities. Coastal cities contributes XX% of Chinese GDP in 2014, however inland cities only represent XX percent. ...
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...Adam Foxcroft K0219955 Adam Foxcroft K0219955 International Dimensions of business Individual Assignment International Dimensions of business Individual Assignment International dimensions of business individual assignment Introduction This assignment will look at one of the world’s largest companies, Wal-Mart, and will look into the company’s choice to expand into China by looking into the factors in the home, host and other international countries that might have had an effect on how and why Wal-Mart moved into china. Brief history Even the world’s largest companies have to start somewhere and for Wal-Mart this was with the opening of its first store in Arkansas in the year 1962 with the intention of creating a discount chain that would offer its customers lower prices by taking lower profit margins. Sam Walton the founder of Wal-Mart and considered the father of modern retailing took Wal-Mart from this one store to the world’s largest and most powerful company in just 50 years. He did this by adopting an extremely aggressive growth policy that in just 12 years took Wal-Mart to the position of having125 stores across 8 states, employing 7500 people and had sales reaching $340.3 million. This is however not the end of the company’s rapid growth and by introducing systems, such as barcode for stock management, computer systems and distribution networks, before most of its...
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...is a real estate owner and developer. The group is one of the largest property developers in China. It develops and sells residential properties. It also operates in hotel and commercial properties industry. Agile has land in Hainan, Shanghai, Nanjing, Changzhou, Chengdu, Xi’an, Chongqing, Shenyang, Tianjing, Guangzhou, Foshan, Zhongshan, Huizhou and Heyuan. Ownership structure 62% stock shares of the company are held by Top Coast Investment Ltd whose major shore holder is the family of the founder of Agile. The second largest shareholder JP Morgan Chase & Co holds 4.38%. Dimensional Fund Advisors Ltd and Blackrock hold 1.18% and 1.16% shares, respectively. The estimated public float is between 30% and 35%. Capital Structure The total assets account for RMB 124,367 million. The company owns short-term borrowings and long-term borrowings RMB 16,363 million and RMB 26,203 million. The shareholders’ equity is RMB 33,851 million. The company’s total debt accounts for 34.2% of total assets. Its net debt/total equity is 72.4% and debt/common stock is 125.8%. Benchmark against the comparables There are lots of property companies in China or listed companies in Hong Kong. However, the most comparable companies should be property companies operating in mainland China but list in Hong Kong. Thus, the eligible comparable companies are Country Garden, Evergrande, Longfor, China Aoyuan and Guangzhou R&F. Respect to the financial ratio, Agile has a better current ratio...
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...INTRODUCTION Control strategies, prevention and reduction of counterfeiting, as applied today in different countries, pose, in the particular case of China, a real problem at two levels. On the one hand, knowledge of the motivations and logics that lead to the consumption and purchase of counterfeit products remain inadequate, given the different needs of consumers, on the other hand, they pose a problem coping methods counterfeiting reduction, to the extent effective strategies were designed for a transnational action against the proliferation of counterfeiting. In this paper we analyze, using the individual interviews method, firstly, the logical and motivational factors that lead to the consumption of counterfeit luxury goods,...
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...States and Canada. ("Buffalo Wild Wings, Inc. History", 2004). Canada is currently the only country other than the United States that Buffalo Wild Wings Operates in. Buffalo Wild Wings is looking for a new venue. Buffalo Wild Wings is looking for a new country to market and present their product. China is seemingly a great choice as other United States based companies are finding great success in their restaurants. Companies such as Kentucky Fried Chicken and McDonalds have seen profitable results from their restaurants in the People’s Republic of China. Buffalo Wild Wings wishes to capitalize on this market and expand the Buffalo Wild Wings brand to the next level. * American fast food chains show surprising success operating in China. Several fast food chains have been very successful in China. Yum! Brands is an American restaurant giant that owns Pizza Hut, Taco Bell, and Kentucky Fried Chicken. This company has had the most success of any multinational restaurant group in the challenging Chinese market ("Localization Key To Yum! Brands' Success In China", 2012). Kentucky Fried Chicken has 140 restaurants in the People's Republic of China. Other companies are following suit in China. Companies such as McDonald's are Kentucky Fried Chicken's primary competitor, even though many Chinese...
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...Google’s managers adopt when deciding that the benefits of operating in China outweighed the costs? When it comes to the benefits outweighing the cost in China from a layman perspective, one could easily say that there is no philosophical principle was adopted, but rather, common sense led them to China. Even though China may have censorship everywhere, the Chinese don't have as many regulations as they do in America or other developed nations. Workers in China earn way less and work longer hours. Google is able to buy property for less in China, too. If anything, Google actually gained money by establishing a branch in China. On the contrary, one could also say that Google’s managers adopt utilitarian approach, because according to utilitarian philosophy, “it focuses attention on the need to weigh carefully all of the social benefits and costs of a business action and to pursue only those actions where the benefits outweigh the costs” (Hill, 2009, p. 144). For Google, they have their own legitimate and logical reasons why they should keep Google’s with the censorship by Chinese government. Without a doubt, China is a huge promising and potential Internet market in the world, where Google can make a great number of profits. Also, Google top managers explain that it’s better to give Chinese users limited information than to give nothing. What’s more, Google managers argue that Google is the only searching engine in China telling users that their searching has been censored because of...
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...Sophy Huang DSOC Essay 5 Revision 9 April 2012 It’s time to change a manufacturing model In the last two decades, China’s economy has grown rapidly, becoming the world’s second largest economy after the U.S. China has gained this achievement by becoming the factory of the world and exporting cheap products to oversea markets. However, recently China has been losing its advantages in the export sector, which its economy is heavily reliant on. New data shows a visible slowdown in manufacturing in China and it’s time for China to reform its manufacturing model to resist this slowdown. Several factors caused this slowdown. First, China’s biggest advantage in the export sector, the cheap, seemingly unlimited supply of labor is gradually diminishing. The number of available workers is decreasing and the wages for these workers are increasing every year. Labor costs have begun to rise in China. The time for unlimited cheap labor is limited. As Michelle Loyalka (2012) points out in her article Chinese Labor, Cheap No More; most big cities are lacking an adequate work forces. The sharp falloff in the amount of labor is mainly due to the One-Child Policy. China started its One-Child Policy in 1978 and has prevented 300 million births from its implementation to 2000. This also means the One-Child Policy has reduced 300 million potential workers. Since the government today is still persistent on this policy, the sheer number of workers will continuously decrease. So, the advantage...
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