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Business Environment and Culture of Potential Markets

Provide a brief overview of the company and why the country you selected may be a potential market.

You have been asked to evaluate the country you selected as a potential market for your product(s)/service(s) and present your findings to other managers of the organization in a memo. In your memo, be sure to address the following:

Provide a brief overview of the company and why the country you selected may be a potential market.

What type of political and legal systems does the country have?

Do free elections take place?

Is the government heavily involved in the economy?

Is the legal system effective and impartial?

Do political and legal conditions suggest that it should be further considered as a potential market?

Objective:
Explain the impact of culture on business activities around the world.
Describe the global business environment.

Solution Preview

1. Provide a brief overview of the company and why the country you selected may be a potential market.

Have you given some thought to the type of company that you want to use for this assignment? Perhaps you want to start a franchise, such as Wendy's or McDonald's. Let's go with McDonald's in China. Your memo will be addressed to the managers of the organization.

Dear managers,

I have evaluated China as a potential market for food service entry, mainly a McDonald's franchise.

As China increasingly embraces the outside world and its snack food, U.S. fast-food chains are kicking off a high-speed expansion in the world's biggest market. McDonald's is the world's biggest restaurant chain, which now has 680 hamburger chain stores on the mainland in China. For example, Schwartz, who began his career as a crew staff at a McDonald's restaurant in Minneapolis in 1968, was appointed in July to head Big Mac's operation in China, where performance was not only weak in the firm's overall global market portfolio, but also lagged rivals. The company's weakness in China and Japan has affected its strength in the United States and Australia, the company said in an earnings report earlier this year. However, the market has expanded and McDonald's is looking for energetic new franchisees to share in their purpose and passion for Customer Mania by putting Hamburgers on customers' faces around the world. You could, therefore, leverage McDonald's food service to capitalize on market development opportunities in China (see http://www.franchisetochina.com/h31.htm).

Chinese customers, who accepted fast-food chains such McDonald's when they entered China in the late 1980s, have been exposed to more media coverage of food safety issues involving Western fast food in recent years. To fend off critics that blame fast food companies for contributing to a rising incidence of obesity and other health problems, McDonald's took a different approach. It said it would list the amount of calories, fat, protein, carbohydrates, and sodium on all product packages in China starting next year (see http://www.franchisetochina.com/h31.htm).

China's economy has indeed spawned a rapidly growing middle-class with ample disposable income and a pent-up desire for faster, trendier and more convenient lifestyles. This booming trend is evidenced by retail sales growing annually at an average of 10%, with retail food and clothing sales growing at higher rates. Even though China's average disposable income is low by developed countries' standards, the buying power of this country is concentrated in urban centers (there are more than 100 of them), each having a population of more than one million. McDonald's foodservice can capitalize on market development opportunities in China.

2. What type of political and legal systems does the country have?

China's political system is Communism, and is therefore not considered a free political system.

Indeed, China poses a ...

Solution Summary

Based on the scenario and for writing a memo, this response provides a brief overview of the company and why the country selected may be a potential market. Specifically, it describes the business environment and culture of a potential market, such as the type of political and legal systems the country has; type of elections; the governments involvement in the economy; and the effectiveness and impartiality of the legal system.

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