Drivers for Global Entry

The company is considering global expansion as a method of increasing revenues.
Globalization has been evaluated as an option to increase the company’s revenues which have
been reducing. Globalization is evaluated as an option for growth—the selected country for
expansion is China. China is an ideal location due to easy access to technology and a large
target market (Fisher-Varden et al., 2006). The country’s population also provides constant
labor and human capital supply. This is essential for the company to increase its skill levels and
diversify its talent base. The new market will help the company improve its competitive
capabilities and be a source of organizational growth and expansion.
Purpose of global expansion
Global expansion helps companies to increase revenues. They provide an additional
market and provide companies with access to new customers. Companies can also execute
global expansion for the reason of accessing newer technologies. Thirdly, an expanded market
reduces risks for companies because it provides companies with an opportunity for
diversification. Diversification ensures that the company can benefit from good revenues in one
location even if the other location is experiencing challenges that may suppress revenues.
Business impacts of global business
Global expansion helps companies fulfill their strategic planning goals. Strategic
planning for a new market requires the company to dedicate more resources towards providing

sufficient stock for the new market and financial resources for planning and logistical
operations (Gollnhofer & Turkina, 2015).
Global expansion helps companies to implement new marketing methods in the global
location. Marketing in a new location may need the company to redesign the marketing
message for the company that sells cell phone cases. For instance, the company may be forced
to adjust its marketing language to Mandarin in China.
Human resources consideration will also be important. As highlighted, China has a large
and educated population, which will help the company access new skills, which will be essential
for successful expansion.
Societal impacts of global business
The company’s expansion will help society. For instance, it will allow a cultural exchange
domestically and in the new location. The company will set up a facility in the new location,
which will help provide locals employment. The company will also benefit from the outstanding
infrastructure in China, such as technology.
Cultural considerations for global business
Cultures vary from country to country. A culture is a natural identity formed through
practices, beliefs, morals, and values (Okoro, 2012). In the new global location, the company
will have to research cultural practices and how such practices impact the business. Hofstede’s
cultural insight is an analytic tool the company has used to compare the cultures in the United
States and China.

Section Two: Market Profile

Cultural Profile
Category United States China
Commonly Spoken
Languages

English (American) Mandarin

Commonly Practiced
Religions

Christianism, Buddhism,
Protestantism.

Buddhism, Catholicism, Daoism,
Protestantism

Power Distance Index (PDI) 40 80
Individualism Versus
Collectivism (IDV)

91 20

Masculinity Versus
Femininity (MAS)

62 66

Uncertainty Avoidance
Index (UAI)

46 30

Long-Term Orientation
Versus Short-Term
Normative Orientation
(LTO)

26 87

Indulgence Versus Restraint

(IVR)

68 24

Political and Economic Profile
Category United States China
Political System Democracy Communist Democracy
Current Leaders Joe Biden Xi Jinping
Economic Classification Mixed economy Mixed economy
Economic Blocs Impacting

Trade

World Trade Organization
(WTO), North American
Free Trade Organization
(NAFTO), Trade and
Investment Framework
Agreement (TIFA)

World Trade Organization
(WTO), Regional
Comprehensive Economic
Partnership (RCEP),

Gross Domestic Product $ 22,996.10 billion $17,460 billion
Purchasing Power Parity $69,288 $19,338
Gross Domestic Product Per

Capita

$ 63,543.58 $ 11,188
Human Development Index 0.921 0.768
Human Poverty Index 11.4% 5.5%

Section Three: Market Considerations

Complete the table below to support your explanations using current exchange rates.
Exchange Rates
Category The U.S. Dollar China
Exchange Rate The U.S. $1 7.12Yuan

The latest exchange rates as shown above. The global business may expose the
company to foreign exchange risks and the company may have to find strategies to minimize
foreign exchange risks. Several strategies the company can use include matching cash inflows
and outflows and entering into forwarding exchange contracts or currency swap agreements.

Legal and Regulatory Considerations
There are several notable differences between the United States and China. China is a
communist society, while America is a democratic society. The economic factors are similar in
many dimensions. For example, both economies are considered mixed and have an impressive
human poverty index. This means that the company can have almost similar growth prospects
while operating in America and China. The United States has a higher Gross Domestic Product
per capita than China, meaning that the Chinese market will likely have fewer customers with a
higher disposable income and better means to afford the company’s product. The exchange
rate shows that both currencies are stable, and the company would not need to make
significant adjustments for exchange rate losses. There are several modes of entry that the
company can consider. China has no restrictions on the mode of entry or business type, and as
such, the company can choose from franchising, direct selling, licensing, and joint ventures.
China’s diverse infrastructural network will support logistical and supply chain operations.

References

Fisher-Vanden, K., Jefferson, G. H., Jingkui, M., & Jianyi, X. (2006). Technology development and
energy productivity in China. Energy Economics, 28(5-6), 690-705.
Gollnhofer, J. F., & Turkina, E. (2015). Cultural distance and entry modes: implications for global
expansion strategy. Cross Cultural Management.

Hofstede Insights. (2021, June 21). Country Comparison. Retrieved September 11, 2022, from
https://www.hofstede-insights.com/country-comparison/china,the-usa/

Okoro, E. (2012). Cross-cultural etiquette and communication in global business: Toward a
strategic framework for managing corporate expansion. International journal of business
and management, 7(16), 130.

United Nations. (n.d.). Specific country data | Human Development Reports. Retrieved
September 11, 2022, from https://hdr.undp.org/data-center/specific-country-
data?utm_source=EN&utm_medium=GSR&utm_content=US_UNDP_PaidSearch_Brand
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hDlARIsAO8PkE1P6WmPR1qrtRFOzwdCUN4pVy7cMGJknAf8MPDGZneAVYO5SWN6kJ0a
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