McDonnell-Douglas Corp. has struck a deal with a company in China to build aircraft there. What kinds of strategies should be employed by this or other doing business internationally? What are the benefits and problems associated with international business?
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1. McDonnell-Douglas Corp. has struck a deal with a company in China to build aircraft there. What kinds of strategies should be employed by this or other doing business internationally? What are the benefits and problems associated with international business?
Over a short span of 28 years, China has witnessed tremendous growth where its GDP grew by an annual rate of 9.7%, this was an increase of 8 fold. During this period the country's ranking rose from being 23rd to being world's 3rd largest economy. By engaging in manufacturing aircraft in China, McDonnell-Douglas Corp. has taken a step to take advantage of cheap labor provided by the country and in turn reduced the operational expenses.
However, there are several strategies which must be considered to establish a fruitful business operation in China.
• Familiarity with culture: The most important aspect of doing business in another country is to study the prevailing culture and analyze how it may foster or suppress business strategies.
• Local business partner: It is very important to find a local business partner who would help the company in establishing the operation in China. Since language is a major constraint, engaging a local partner would be beneficial for proper planning of operations.
• Clear contract terms: It is also necessary to plan strategy around the legal side of doing business in China. Through contract terms, exact terms of payment terms and performance standards could be worked out. However the company must be planned to be flexible even after having clear contract terms. This is because Chinese tend to work in own way and may ignore certain terms.
• Risk Analysis: The ...
The expert examines the strategies employed by doing business internationally.