1 Comprehensive Analysis Comprehensive Analysis Paper Bobby Story, Brian Stires, Candida Moran, Eric Fuqua, Justin Basagic University of Phoenix 2 Comprehensive Analysis East Asia Regional Analysis East Asia is home to a vast among ocean coastline. The intercostal waterways are plentiful allowing for easy of products through the region. There is also a commitment to the national railways, where, Japan and China has the greatest track mileage. (Columbia Electronic Encyclopedia 2012), China, the Republic of Korea and Singapore rank among the top 10 leading world ports in container traffic. (World Trade Organization, 2011, p.30) The regions use of air freight transportation has been noted as one of the most efficient in the world. The region has proven to incorporate railways, maritime, and air freight transportation of goods has been recognized by economist worldwide. This effective use of product transportation system has propelled the region to its current economic rise. Most of the countries throughout the region republic states, except for China, Vietnam, and North Korea which are communist while Burma is currently under military dictatorship. According to a World Bank report, East Asia remains one of the main growth drivers of the world economy, accounting for nearly two-fifths of the global economic growth. While China is expected to grow about 7%, in 2015, the rest of the region has a growth expectancy of 4.6%. (The World Bank, 101/5/2015) The major social issue facing the region is constant alleged human right violations by international human right organization. Terrorist activity in the East Asia is limited to a few organizations, mostly foreign insurgent targeting foreign diplomats. There are currently two Economic integration group in the region. One is the Association of Southeast Asian Nations. It membership includes The Philippines, Vietnam, Brunei, Indonesia, Singapore, Malaysia, Cambodia, Myanmar, Thailand and Laos. The Asia-Pacific Economic 3 Comprehensive Analysis Cooperation is the other, which has 21 members; among them are the People's Republic of China, Hong Kong, Japan, Mexico and the United States. China has signed a free trade agreement with the ASEAN, removing 90 percent of tariffs of traded goods. (Hill, 2003, p.305) The membership of APEC represent 49% of the world's GDP. (Hill, 2013, p.306) In addition, this year The United States signed the Trans-Pacific Partnership with several members of the ASEAN, which many analyst believe China will make a strong attempt to join. China Country Analysis In comparison to other countries and markets, China's political risk is predominately really low. As a lower political risk might seem beneficial to investors, the decrease in rules and regulations might not be adequate for a foreign investor. This regulatory transparency can potentially conflict with potential companies based out of Europe or the U.S. Regulations and business standards in these countries are completely different to those in China. China political stability can at times become inconsistent as the country's political risk is lower. However, business projects tend to be successful in China's market when political actions are at a minimum. The real dispute comes in to play when the country's political standards are in conflict with another country while conducting business. China is the second largest economy in the world (www.forbes.com). The current economic conditions in China are on the rise. Any business prospects involved for the long term can expect economic growth over time. However, one area of concern is the productivity based on the numbers of existing workers in the country. Many feel that the output should be slightly higher based on the amount of workers the country employs. 4 Comprehensive Analysis Financial options in China's market are currently very restrictive. Shares and stock seemingly make up the vast majority of capital investments within the country. However, financial investments for the most part are for the most part controlled by government regulations. Overall, the country's government has been the controlling hand in the finance and banking industries. China's environment is currently steadily declining. The current air quality in China is amount the worst in the world. Economic conditions have limited necessary resources need for survival as well as production. Many factories used for production of goods have been forced to shut down due to water shortage. These environmental conditions might become a red flag for foreign investors and business trade. Along with the decline in environmental stability, the health in the country has also been affected. Since the country is currently struggling with maintaining a safe environment, much of the population continues to be affected health wise. The poor air quality and pollution is deteriorating the population. Cultural considerations in China are very important when conducting foreign business. The country views and values proper Chinese business and social etiquette. One key aspect of business and social etiquette in China is the \"face\". A potential investor can give \"face\" by accepting invitations, gifts, attending business meetings and anything that's in agreeance with accepting and being present. The opposite such as declining gifts, invitations or behaving poorly is categorized as loosing \"face\". Organization description 5 Comprehensive Analysis This organization produces shipping containers for use on container ships. The world of today would not be possible without the connection of countries to move large amounts of products between the two. Our organization allows this to happen by producing the transportation method to make this process organized. Product needs assessment China is the largest exporter in the world. The largest part of their exports are electronics, such as computers and electronic parts. The total amount of all exports is $2.25 trillion. The largest need of the country in imports is crude oil, which is grouped alongside other petroleum products and Iron. The second highest import is integrated circuits, likely to go into the computers they are exporting. The total imports are $1.56 trillion. Product description The products that the organization produces are manufactured shipping containers. They are large metal containers that are loaded onto container ships in ports to deliver to other countries around the world. Obviously, some of the need to ship comes from the need just to have containers available. The containers also need to have durability and weather resistance in order to withstand years of sitting outside in all types of weather and salty sea spray. This will also include on-ocean weather, such as tropical storms. In order to allow organization and fitting onto trucks there are standards of container dimensions that are followed as well as built-in features to increase durability, allow forklift movement, and other inclusions. 6 Comprehensive Analysis References: World Trade Organization (2011); Trade patterns and global value chains in East Asia: From trade in goods to trade in task; https://www.wto.org/english/res_e/booksp_e/stat_tradepat_globvalchains_e.pdf The World Bank (10/5/2015); Growth Moderate But Still Remain Solid, Says World Bank Report; http://www.worldbank.org/en/news/press-release/2015/10/04/growth-in-east-asia-pacific-likely-tomoderate-but-still-remain-solid-says-world-bank-report www.forbes.com Hill, C.W. (2013). International Business. Competing in the global marketplace (9 th ed.). Boston, MA: McGraw-Hill http://atlas.media.mit.edu/en/profile/country/chn/ Comprehensive Analysis Presentation Submitted by Justin Basagia, Eric Fugual, Candia Moran, Brian Stines, & Bobby Story November 11, 2015 Ms. Kathryn Hayman, Instructor Introduction China is the second largest economy in the world. The current economic conditions in China are on the rise. Any business prospects involved for the long term can expect economic growth over time. However, one area of concern is the productivity based on the numbers of existing workers in the country. Many feel that the output should be slightly higher based on the amount of workers the country employs. Regional alliances and economic integration China's Economic Conditions China's Environment The current economic conditions in China are on the rise. Any business prospects involved for the long term can expect economic growth over time. However, one area of concern is the productivity based on the numbers of existing workers in the country. Many feel that the output should be slightly higher based on the amount of workers the country employs. China's environment is currently steadily declining. The current air quality in China is amount the worst in the world. Economic conditions have limited necessary resources need for survival as well as production. Many factories used for production of goods have been forced to shut down due to water shortage. Country Analysis Political stability China's political risk is predominately really low. As a lower political risk might seem beneficial to investors, the decrease in rules and regulations might not be adequate for a foreign investor. This regulatory transparency can potentially conflict with potential companies based out of Europe or the U.S. Finance options Financial options in China's market are currently very restrictive. Shares and stock seemingly make up the vast majority of capital investments within the country. However, financial investments for the most part are for the most part controlled by government regulations. Country Analysis Terrorism in China The concept of terrorism, as it evolved and is understood in the West, did not exist in imperial China. In that setting, political criminality took the form as violence against the emperor, and was viewed as harmful as it induced fear and led to "chaos. With the exception of "good" political violence against rulers whose lack of propriety and virtue resulted in loss of the mandate of heaven, violence was seen as contrary to human nature and the Tao. Cultural Considerations Cultural considerations in China are very important when conducting foreign business. The country views and values proper Chinese business and social etiquette. One key aspect of business and social etiquette in China is the \"face\". A potential investor can give \"face\" by accepting invitations, gifts, attending business meetings and anything that's in agreeance with accepting and being present. China Shipping Container Lines Product needs assessment China is the largest exporter in the world. The largest part of their exports are electronics, such as computers and electronic parts. The total amount of all exports is $2.25 trillion. The largest need of the country in imports is crude oil, which is grouped alongside other petroleum products and Iron. The second highest import is integrated circuits, likely to go into the computers they are exporting. The total imports are $1.56 trillion. Product Description The products that the organization produces are manufactured shipping containers. They are large metal containers that are loaded onto container ships in ports to deliver to other countries around the world. Obviously, some of the need to ship comes from the need just to have containers available. The containers also need to have durability and weather resistance in order to withstand years of sitting outside in all types of weather and salty sea spray. Organization and product or service analysis Organization description This organization produces shipping containers for use on container ships. The world of today would not be possible without the connection of countries to move large amounts of products between the two. Our organization allows this to happen by producing the transportation method to make this process organized Country Risk and Strategic Planning Analysis Country Risk and Strategic Planning Analysis Justin Basagic, Eric Fuqua, Candida Moran, Brian Stires, Bobby Story MGT/448 November 16, 2015 Kathryn Hayman Country Risk and Strategic Planning Analysis Country Risk China is currently the fastest growing market as well as being considered the largest economy. Foreign investments in China have a huge potential for increasing revenue growth since the costs for product development is dramatically lower than most countries. Since China is the top growing market for any potential business venture, many risks have to be analyzed prior to global expansion. Political, legal, and regulatory risks According to the article, China Country Risk Report (2015), China has always had political challenges under the communist rule for decades. Research reveals that absolute power belongs to communist party. The power is over legislation and economic and cultural institutions. There is a difference in the western economy because the government is in control of doing business and there is transparency. On the other hand, in China laws and guidelines are not absolute. As a result, huge companies can come under several regulations. However, it is known that China endorses a form of social network referred to as guanxiang which means the association between the individual and units of the network. There are several legal challenges that China has to encounter in the shipping business. Severe laws and patents protect internal and distant companies, but in China the authorized system has been well-defined as loose. Numerous loopholes in the law favors China. China's agreement with WTO has entitled it to be included in the international laws and rights to Country Risk and Strategic Planning Analysis amendments. Although China is a part of the WTO, it is known that technology is stolen by the workers of outsourced firms or by China's competitors (2015). The regulatory risks that China is involved in cannot be separated by products. There risks in China are measured the factories of the world. Research shows that China accounts for only one- third of all the shipping in the western countries. China's bargains are for low cost materials and minimum labor. The bargains are attractive to western organizations. Shipping in and out of China by western companies are done through agreements with manufacturers of companies of western firms or independent owners. Western companies face many encounters when using China shipping containers as reported by the Journal of Emerging Knowledge on Emerging Markets, 2009. Exchange and repatriation of funds risks China's Chief Executive Leung Chun-ying reveals that there is continued pressure on the economy. Although the economic policy is strong and is focused on extending integration with other countries, the government is reluctant to invest in companies that would be profitable. The signing of the Closer Economic (CEPA) in 2003, was crucial for integration. After signing the agreement, China has made huge investments in trades contributing to the bottom-line. The funds have increased for all products including shipping. The shipping containers are currently and have been very profitable for China. China's shipping containers are the most developed in the world and have one of the best rail system (Walker, Shipman, & Fan, 2009) Country Risk and Strategic Planning Analysis Competitive risk assessment Kai-Yu, Wenpin, & Ming-Jer (2015) reported that China's has a major and profoundly completive markets in the nation. It is said that China's competes head on with global players on price and win over the market. However, western organizations think they can petition for a higher premium on their product. This would be surprising, considering it would be a way to stop the risk of having a low cost lean operation in China. Others could compete on a practical price level. Some western companies make the mistake of thinking they can compete with China in the shipping market, but find themselves coming up short in profits. China has new companies coming into the market every day with the latest shipping containers. Therefore, competition stays strong for China. Taxation risks and Double taxation risks Upon expanding business to China, many countries must consider the potential risk of taxation in the country. Possible potential taxation risks include expense laws identifying with profit pay and capital additions on shares the change in securities and stocks becoming less appealing. Taxation alluding to salary assessors that are paid twice on the same wellspring of earning pay are considered double taxation. Double taxation collection happens on the grounds that companies are viewed as isolated lawful elements from their shareholders. In that capacity, companies pay charges on their yearly income, pretty much as people do. At the point when companies pay out profits to shareholders, those profit installments acquire wage charge liabilities for the shareholders who get them, despite the fact that the income provided was money used to pay were at the corporate level point. Country Risk and Strategic Planning Analysis Market Risks There are risks in the market for shipping containers. The containers are a set size, based on standards, so it is possible a product shipped will not fit due to size or shape. Defective containers have the probability of most likely being bought once shipped. Pertinent costs will be absorbed by shipping companies, therefore much risk should not be present in this area and should actually work to our advantage. Sale Promotions in this field will likely not be anything more than bulk purchase discounts, which will attract startup company customers. Distribution and supply chain risks Origin distribution risks will primarily target delivery services and local buyers. Long distance delivery could force us to raise prices to account for fuel and shipping changes. Our primary supply chain components will be steel for the containers and industrial strength hinges. The steel distributors could potentially become a risk in the event that production stalls and other distributors might be needed as a replacement. Physical and environmental challenges to entering and operating in a target market The shipping container market in China is considered one of the largest in the globe. Since the Chinese shipping container market continues to increase as economic revenue continues to rise, the capacity of the receiving ports seem to be decreasing in size. Considering the volume of shipping containers being shipped to China have increased drastically, the port capacity seems to not be sufficient. In order to continue to accommodate the growing number Country Risk and Strategic Planning Analysis of shipping containers in the current ports, equipment costs have also risen. The physical environment at shipping ports has become challenging therefore enlisting the use of cranes and special machinery. Another factor considered for shipping ports is the need for water deep enough to approach the channels. Social and cultural risks Since shipping ports have increased in size as well as volume, many are concerned about the goods being shipped into these ports. The volume of shipping containers increasing has caused alarm in most of the population. Many foreign countries have been on high alert as shipping container ports with less screening guidelines are considered high risks. One possible threat is the smuggling of mass weapons or contraband used by terrorists. Cyber and Technological risks Considering the shipping industry is lucrative in the overall global business economy, technology plays a huge rule in the shipping procedure. Computerized shipping navigation along with container inspection have evolved just as the industry has. However, along with such technological advances there is also the heightened threat of cyber hacking. Leading industry makers have enhanced cyber security features in order to prevent cyber hacking from interfering with the shipping process. The threat of cyber hacking can disturb safe navigation of shipping vessels, safe port access and cargo and terminal operating systems Country Risk and Strategic Planning Analysis Strategic Planning process Mission and Objectives Overall, the shipping industry in China is one of the largest on a global scale. In order to effectively conduct business in the shipping container industry, we must consider all political, regulatory, distribution and cultural risks. For adequate service of our shipping container products, we will analyze in depth the potential risks associated with conducting business in the Chinese shipping market. SWOTT Analysis Strengths The Trans-Pacific Partnership, recently signed will give United States exporters access to 11 Pacific Rim markets collectively representing 40% of the global Gross Domestic Product. (Selig, 10/5/2015) In turn, it will give the other 11 member markets access to the trading partners. In addition, as other nations within the Pacific Rim seek entrance into the partnership, access inter-commerce activity increases. This leads to great opportunity to enter into the maritime shipping container market. The maritime transportation industry has very sub-market than can be exploited in order to maximize profitability. As a result of the Trans-Pacific Partnership and its economic potential, the Department of Commerce is currently encouraging financial institution to provide low increase loan to companies seeking to enter into the foreign Country Risk and Strategic Planning Analysis markets. In addition, a fair amount of financial assistance can possibly acquire from foreign investor, along with some partnership agreements. Weaknesses The major shipping and shipbuilding companies in China are state-owned. This creates a very competitive market, where there home government is a primary competitor. The lack of a well-established relationship with Chinese government departments can hinder progress. Opportunities Opportunities for profitability within the maritime container transport market will increase for some time. The countries who are currently members of the Trans-Pacific Partnership will develop increased shipping requirements. By establishing good workable business partnership with the major Chinese Shipping companies, the company can establish a lasting piece of the marketplace by capitalizing on the transportation needs of the 11 countries which are members of the agreement. Threats Chinese governmental policy can be sided toward internal governmental favoritism. The daily production could be hindered by governmental loopholes and unnecessary regulations designed to reduce possible market shares of foreign companies. There are currently 14 companies that participate in shipping of containers to China. It is expected that the majority of these companies will mostly seek to take advantage of their current established business base Country Risk and Strategic Planning Analysis in China and pursue increasing their market shares in as a result of the added trade access, as a result of the Trans-Pacific Partnership. Trends Other countries will continue to seek entry into the Trans-Pacific Partnership. As membership grows, so does the opportunity to increase market shares. The competition will continue to seek ways to reduce cost of maritime transportation, which decreasing transportation time. Increase partnerships are expected between rail, road ground, and air and maritime freight companies. Those companies that are more efficient at establishing these alliances will dominate the international transportation marketplace. Strategy Selection The firm will incorporate a localization strategy. By doing so it can take advantages of the local resources environments in which it operates. The cost of resources will vary gravely, it would be beneficial to decentralize maintenance, production and labor according. Transportation is pretty black and white; however the customer's factors of importance may differ from country to country. Some economies made present hire interest in efficiency and speed of transportation; other may place a higher value of cost instead of speed. By customizing the product offering to local demands, the firm increases the value of that product to the local market. (Hill, 2013) The company must be able to accommodate these differences in order preferences in order to remain competitive. Country Risk and Strategic Planning Analysis Mode of Entry The mode of entry for our shipping business will be that of importing and exporting. The shipping business centers itself on creating the means for the import and export of shipping containers efficiently. Considering the various port terminals made available for exporting containers, we will effectively analyze which port entries have heightened security features. Control and Evaluation In order to adequately enhance the control and evaluation process, shipping containers will undergo a numerous amount of product testing. Prior to shipping these containers, each product will be evaluated to ensure it is built accordingly and properly prior to the final shipping process. Contingency Plan If the cost of doing business in China produces an unfavorable returns-on-investment or emergency situations occur, making China unfavorable business environment, primary operations should be moved to Singapore. According to the World Shipping Organization, Singapore is second, next to Shanghai in container shipping worldwide. (worldshipping.org, 2013) Singapore is part of the Association of Southeast Asian Nations (ASEAN) and recently joined the ranks of the Trans-Pacific Partnership. Therefore, government regulations should present a feasible environment for economic growth. Country Risk and Strategic Planning Analysis References China Country Risk Report. (2015). China Business Forecast Report, (3), 1-50 Journal of Emerging Knowledge on Emerging Markets, 2009. Vol. 1 [2009], Art. 7 http://digitalcommons.kennesaw.edu/jekem/vol1/iss1/7 DOI: 10.7885. Kai-Yu, Wenpin, T., & Ming-Jer, C. (2015). If They Can Do It, Why Not Us? Competitors As Reference Points for Justifying Escalation of Commitment. Academy Of Management Journal, 58(1), 38. doi:10.5465/amj.2011.0869 Walker, J., Shipman, M., Yang, T., & Fan, Z. (2009). China's QFII regime: Compliance risks and possible changes. Journal of Securities Law, Regulation & Compliance, 2(2), 144. Country Risk and Strategic Planning Analysis