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China Joint Venture Essay

2760 Words12 Pages

Introduction: The purpose of this report is to critically analyze the different modes of market entry by evaluating the advantages and disadvantages of each in regards to the type of product, organizational and international factors. The report demonstrates how SM Jaleel Co. Ltd uses this analogy to enter China with its Fruta Brand in the most effective and profitable way. Company Background: SM Jaleel Co. Ltd (SMJ) is a manufacturer of non-alcoholic beverages which includes a wide variety drinks including fruit juices of in the English speaking Caribbean. SM Jaleel Co. is a MNE that has various subsidiaries and strategic alliances worldwide. Their main competitive advantage is their technological expertise in the production of their products. …show more content…

Organizational Suitability: SM Jaleel already has two successful joint venture, hence they are familiar with the level of resources, commitment and risks associated. The partnership will allow SMJ to gain new technology and production methods greater expanding their capabilities. Environmental characteristics of China: Joint Ventures are welcomed in China. Partner with guanxi/connections will allow greater chance of success. China’s large market size and demand will lead to higher profitability. Due to shared ownership, risk and profits, Chinese partner is likely to be more motivated towards achieving goals. Adaptation to the local taste is likely as Chinese partners have a better understanding of local tastes. Disadvantages of Joint Ventures: Product Suitability: Raw fruit derived from the Caribbean may be difficult to source in China. Organizational Suitability: Risk is greater as the resources and skill required is immense. Flexibility is lower as decisions require discussion among both parties discussion thereby reducing responsiveness. SMJ are susceptible to asset confiscation and expropriation when contract

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