How business strategy might be affected by developments in China

How business strategy might be affected by developments in China

1. What is business strategy

   • articulates direction
   • developed in three steps
     • 1) analysis
     • 2) integration
     • 3) implementation

2. China

   • 2nd biggest economy
   • GDP growth 7.7%
   • 1.35 billion inhabitants
   • 16/20 most polluted cities

3. Developments in China

   • sustainable growth through investment in economic restructuring
   • promoting emerging markets
   • transition from export to consumption based economy
   • building markets and market share in service sectors
   • move away from low cost manufacturing
   • increased domestic competition
   • increased environmental regulations

4. Investment in R&D

   • Tata has invested billions of $ in product development for Jaguar, new materials used for manufacturing
   • Toyota's luxury American car brand Lexus have built an R&D facility in Jiangsu province to engineer their cars towards the Chinese market.

5. Ansoff's Matrix - Diversification (strategy of bringing new products to new markets)

   • JRT attempting to catch up with German rivals in China by developing new models
   • Audi designing new cars tailored specifically to a wealthy Chinese audience, (orientated for chauffeurs and extra leg room in the back)
   • Tesco focusing on importance od being local in different regions of China
     • Appointing local directors to strengthen Chinese Board and plans to recruit local talent

6. Porters Generic Strategy

   • cost leadership, lowering costs to increase profits
   • differentiation
   • adding value to product areas which are of significance for customers who are willing to pay premium prices
   • Gieves & Hawkes struggling to justify high prices as consumer confidence declines
   • Burberry expanding into first-tier cities only to keep brand exclusivity in wealthier parts of China

7. Joint Ventures

   • JLR adapting to the Chinese market through partnering with regional companies across the country, aiding in the development of brand marketing to Chinese consumers
   • Tesco will fold its 131 hypermarkets in the country into China Resources Enterprises Ltd. and retain a 20% stake in the business