GGR252H1 Chapter Notes - Chapter 1: 1997 Asian Financial Crisis, Geomarketing, Arena

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29 Jan 2013
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Chapter One: Foreign Retailers in China - Stories of Success and Setbacks by Shuguang Wang and Paul Du
Introduction
1. 1990s Wrigly, Lowe created TNC allowing foreign investments(pol't
and economic approach)
Vida and Fairhurst (1998)
1. Direction and pace of retail internationalization changed by
firm/external retail
2. Key: resource availability (ie. consumers/cond.)
3. Direction of international retail expansion from western to eastern
cultures
Retail Internationalization (Dawn, 2003)
1. Retail capital: production and consumption ww.
a. Stability - a lot of fluidity in considerations
b. Consolidation -adjust to new cond.
c. Control - vertical/horizational chn.
d. Dominance - using home strategy to rule
China Frontier for TNC
1. Wang (2003): bypass regulatory barriers and West had more
advance information technology in so cultural distance less
important factor
2. WTO (Dec.2001): eliminate trade barriers
Examining post-WTO China in foreign
retailers
1. Analyze market penetration + TNC performance
2. Examine corp. strategies in different levels of market
3. Myers and Alexander (2007): degree of control more/less attractive
a. Govn't stats
b. Corp. web
c. News reports
Benchmarks of consumer market size
(Recent changes in market conditions
and elimination of unconventional trade
barriers)
1. Population Size
2. Per capita income
*Largest spent on food followed by education, housing, transportation
(1970s: watch, bike, sewing machine)
Progression of China Moving into WTO
1. 1992: Opened up markets
2. 1995: restrictions unconventional WTO/GATT and only 11 cities
3. 2001: China into WTO (3 years l8, remove rules)
4. 2004: Allowed wholesale, wholly own retail, in-store and other chn.
of retail allowed, povt gov't alllowed to approve future
opening/outlets
*Annual inspections must pass
Sucess of Foreign Retailers
1. Degree of market penetration/level of business performance
2. Major foreign retailers: Western, Japanese, Southeast Asia
3. West : highest penetration in China because of WTO-entry (highest
with Walmart and lowest with Makro and Ikea)
4. Japanese: earliest foreign retailers (slower and geographically
limited compared to West)
5. Southeast Asia: Capture larger market share than Japanese (esp.
trust-mart and RT-mart)
Examination of Corporate Strategies
1. Retailer offer competitively superior product by local consumers
2. Retailer develop superior economics across value chain
3. Global retailers execute in local evn't
Western Retailers
1. Have more capital resources than Japanese and Southeast Asia
2. Big-box format and create hypermarket (Wal-mart). warehouse
membership clubs (Makro/Sam), neighborhood mini-supermarkets
3. Lack of private automobiles and living space decays warehouse
membership clubs
4. Supermarkets fail because of local markets enroachment
5. Ikea stores are too expensive
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