Description
Purpose of Assignment
This week students will review and revise their Week 3 Research Analysis for Business Signature Assignment based on economic analysis and the feedback provided by their facilitator. Students will also expand their Week 3 analyses to evaluate the challenges of expanding their chosen company's production to a foreign market.
About Your Signature Assignment
This signature assignment is designed to align with specific program student learning outcome(s) in your program. Program Student Learning Outcomes are broad statements that describe what students should know and be able to do upon completion of their degree. The signature assignments might be graded with an automated rubric that allows the University to collect data that can be aggregated across a location or college/school and used for program improvements.
Assignment Steps
Resources: Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web offering support for Office products.
Revise your Week 3 assignment, Research Analysis for Business, using the feedback provided by your facilitator. This Week 6 report should only include one conclusion, so you will need to rewrite the conclusion you included in your Week 3 assignment, Research Analysis for Business.
Select a foreign market in which to expand your chosen product.
Prepare a minimum1,750-word report addressing the points listed below. The use of tables and/or charts to display economic data over the time period discussed is highly encouraged, you may submit any economic data in Microsoft® Excel® format in a separate file. You may use the U.S. Department of Labor's Bureau of Labor Statistics (BLS), U.S. Dept. of Commerce's Bureau of Economic Analysis (BEA), the Federal Reserve of St. Louis's FRED data, the CIA World Fact Book, World Bank data, and World Trade Organization, or other appropriate sources you might find on the Internet or in the University Library. The new sections of your report should:
- Evaluate current global economic conditions and their effects on macroeconomic indicators in your selected country. Provide forecasts for population growth, gross domestic product (GDP) growth, GDP per capita growth, export growth, and sales growth.
- Evaluate any competitors' existing production in the chosen country.
- Assess sales forecasts in the selected country by using the Federal Reserve of St. Louis's FRED data, the CIA World Fact Book, World Bank data, World Trade Organization, or other appropriate sources you might find on the Internet or in the University Library.
- Categorize the type of economy that exists in your selected country as closed, mixed, or market. What is the difference between these types of economies and how might this affect your expansion?
- Assess how your chosen country's current credit market conditions, especially interest rates and the availability of financing, affect demand for your product or service and your planning or operating decision for your production in that country.
- Analyze the role of the selected country's central bank on that country's economy.
- Compare the availability, education, and job skills of the work force in the selected country. Discuss any additional challenges of international production, such as political stability, availability of government financing or other incentives, threat of capital controls, and exchange rate risks.
- Explain any additional supply chain challenges you anticipate if attempting to make your product in your chosen country and selling the product in other countries.
- Based on the data gathered and analysis performed for this report write a conclusion in which you:
- Create business strategies, including price and non-price strategies, based on your market structure to ensure the market share and potential market expansions and explore global opportunities for your business in a dynamic business environment and provide recommendations.
- Develop a recommendation for how the firm can manage its future production by synthesizing the macroeconomic and microeconomic data presented.
- Propose how the firm's position within the market and among its competitors will allow it to take your recommended action.
- Recommend strategies for the firm to sustain its success going forward by evaluating the findings from demand trends, price elasticity, current stage of the business cycle, and government.
- Recommend any comparative advantages your company will have over competitors currently operating in that country, and defend your position, either for or against, expanding your company's production into your chosen country based on your research.
Integrate with the Week 3 Individual Assignment, and incorporate corrections and suggestions from the instructor's feedback. The final report should be a minimum of 2,800 words.
Cite a minimum of three peer reviewed sources not including the textbook.
Include all peer-reviewed references and government economic data sources/references from Week 3.
Format your assignment consistent with APA guidelines.
Click the Assignment Files tab to submit your assignment.
Attached are as follows:
Wk 3 paper
Wk 3 grade to help guide you
Grading guide for this paper
Reference:
McConnell, C., Brue, S., & Flynn, S. (2015). Economics Principals, Problems, and Policies (20th ed.).
https://library.phoenix.edu/Phoenix
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Explanation & Answer
Attached.
Running Head: CHALLENGES OF EXPANSION TO A FOREIGN MARKET
Challenges of Expansion to a Foreign Market
Name
Instructor
Institutional Affiliation
Date
1
CHALLENGES OF EXPANSION TO A FOREIGN MARKET
2
Company Introduction
The Walt Disney Company is an American multinational entertainment and mass media
company that is located in Burbank, California. The diversified media conglomerate is the
second largest media company in the world in terms of revenue. The company was established in
1923 by Walt and Roy Disney. Since then, the company has been engaging in a range of
products and services such as film and television production as well as theme parks. Walt Disney
is a public traded company that trades its financial securities in the New York Security Exchange
Market (Mannheim, 2016). The company’s CEO and chairman is Bob Iger and it employs more
than 200,000 employees in its world-wide stores.
Walt Disney New Division for Pixar Animation Studios will be introduced in the Chinese
Market, one of the world’s fastest growing economies. The decision to introduce the company’s
new division in the Chinese market was reached after evaluation of the various economic factors
existing within the Chinese market (Krugman, 2008). China is considered one of the fastest
growing economies in the world. In 2014 the Chinese economy made up about 17.53% of the
World’s Gross Domestic Product (GDP) according to World Bank. China being one of the
countries with the highest purchasing power will therefore be an ideal market to introduce this
product. Research indicates that in 2015 about £ 8.9 Trillion in financial assets were held by
households and this means that the company has opportunity to do well in China since most of
the wealth is held by individuals who are the prime consumers of the company’s products. China
also provides an ideal place to start up a company since the country has the strongest and huge
open economy in the world with a cutting edge for business culture (Krugman, 2008). This
makes it more attractive for foreign direct investment by many foreign companies across the
CHALLENGES OF EXPANSION TO A FOREIGN MARKET
3
globe. The country’s population also has the strongest urge for new product trends and
technology.
Although Walt Disney has its existence in the Chinese market, the company’s new
division of Pixar Animation Studios will be introduced in the Chinese Market. China is also one
of the countries with the highest disposable income and this means the country will be an ideal
place to conduct business for the company. Moreover the country is also considered one of the
countries more current in technology and since Walt Disney’s Pixar Animation Studios is an
innovative product made from the current technology, it will be more attractive to a large number
of consumers within the Chinese market (Krugman, 2008).
Current Global economic condition of China
China’s economy has been forecasted as the second largest economy among the emerging
market economies after India. The country’s economy is highly developed, stable and efficient
and on the basis of productivity the country is ranked 12th. Labor and workforce in the Japanese
market are extremely efficient and highly skilled (Chen, 2004). The country also has the highest
growing population with middle class being the highest within the country’s population income
prospects. The country has the largest overseas investors with the country’s economic growth
heavily dependent on export in which the country exports electrical equipments and machines.
China is the third largest economy in normal GDP and forth largest by purchasing power
parity. The country’s Gross Domestic Product currently stands at 19.51 Trillion US Dollars with
a population of about 1.367 billion people based on the statistics provided by the International
Monetary Fund (IMF). Despite the global economic crisis that hits the global economy in 20082009, the country has been able to stand steadily in terms of stable economy (Krugman, 2008).
4
CHALLENGES OF EXPANSION TO A FOREIGN MARKET
Macroeconomic indicator (China)
2012
2013
2014
2015
2016
2017
2020
GDP (USD bn)
8,575
9,694
10482
11065
11964
12600
14800
Inflation Rate (CPI, annual variation in %)
2.72
2.63
1.92
1.44
2.0
1.2
3.7
Unemployment Rate
4.1
4.1
4.1
4.05
4.05
4.02
4.0
GDP per capita (USD)
6,333
7,124
7,662
7,924.65
-
6,890
8,330
Population (million)
1,354
1,361
1,368
1,376
1,382
1,388
1,407
Exports (USD billion)
2,049
2,209
2,342
2,150
1,720
2,100
Source: Tradingeconomics.com
Competitor Analysis
Expanding the company’s division into the Chinese market may seem to be very
productive considering the fact that the country has a large population and a large number of
middle class consumers that have high affinity for technology related products. It is also
important to note that although the Chinese market would be a productive market for the
company, it’s a very competitive market considering the fact that the country has a large number
of techno savvy companies (Krugman, 2008). There are several companies that produce similar
products to that of Walt-Disney in the Chinese market. Despite the presence of these companies
in the Chinese market, Disney still enjoys greater market share in the industry.
Walt Disney’s main competitors include Viacom, Time Warner, 21st Century Fox, CBS,
and Comcast. Although these companies compete for the same market with Walt Disney, Walt
Disney still enjoys greater popularity within the market. Time Warner is the biggest competitor
of Walt Disney within global market. The company not only tries to challenge Walt Disney in
CHALLENGES OF EXPANSION TO A FOREIGN MARKET
5
the television industry but also in the merchandise sector. CBS on the other hand offers a huge
threat to Walt Disney and ABC television network through their innovative media programming
products (Krugman, 2008). Although ABC presents a huge future threat to Walt Disney, Walt
Disney still enjoys larger market share when compared with its close competitors.
Forecasted Sales for the company in the Chinese market
Although there is stiff competition within the Chinese market, the company has
forecasted sales of about 200 Billion Yuan for the first year of operation of Walt Disney’s Pixar
Animation Studios. Consequently the company intends to gain a market share of about 50% in
the Chinese market and this is seen from the fact that Chinese population has high affinity for the
new product and more innovation (Krugman, 2008). Since the company intends to introduce
products that have existed in the Chinese market though in the perspective of different brand a
high sales is forecasted for the first year of operation and in the consequent years.
China’s open economy
The type of economic system that exists within a country usually determines the level of
foreign direct investment (FDI). Closed economies usually are unattractive for foreign investors
since the government imposes restriction on export and imports as well any entry by other
investors within that market. The most common economic systems are traditional, command,
market and mixed economies and each of these economic systems have their own strengths and
weaknesses in regards to trade and investment. Chinese market economy is an open economy
which means that foreign companies are free to set up their firms and carryout business freely
within the market. Traditional economic systems are the oldest economic systems. This system
influences the produc...