The development of global strategies might help the business in question to successfully move to the global market. Global management deals with “the techniques and practices that are involved in directing and controlling international organizations” and “the issues that arise as a consequence of international and global strategies” (Lynch, 2014, para. 1). Resources should be a concern in a global strategy, as they are “acquired on input markets, transformed within the enterprise and passed on to the environment again in the form of products or services on output markets” (Baldegger, 2012, p. 25). Enterprises generate their products or services through the effective management of resources. Thus, corporate management should assess the global business environment changes, including risks and opportunities associated with the export of resources to China.
Textiles may not be the only resource concern for the business exporting goods to China. Finances and human resources should also be considered before the global expansion of the business. The company might expect financial expenses caused by the Chinese government’s import taxes. According to the State Taxation Administration of the People’s Republic of China (2019), a three-tier VAT rate of 16%, 10%, and 6% is currently employed. Since the import taxes are considerably high, it might be reasonable to finance the construction of a textile plant in China run by the enterprise’s representatives. Additionally, HR managers should pay attention to the efficient use of human resources abroad. The employees should be ready to work in a foreign environment and trained for cooperation with foreign management and representatives. Finally, personnel training and transportation expenses might strain the company’s budget and should be taken into consideration.
The decision to move to China should be based on the business’s ability to adapt its strategy to the new environment and minimize the risks involved in entering the global market. The assessment of the local government, the country’s laws, policies, and regulations might be crucial for business management in a foreign country. The construction of a plant run by foreign management in China might require permission from the Chinese authorities. Negotiation strategies and partnerships with local companies might reduce the risks associated with government restrictions (Lynch, 2014). Moreover, it is vital to make sure that human resources understand Chinese culture, ethics, and business style, especially local negotiation techniques. Thus, the consideration of the factors mentioned above might impact the decision to move to the selected country.
The enterprise’s competitive strategy should be revised before its introduction to the global market. In order to achieve an advantage over competitors, the business should investigate its strengths and weaknesses. On the one hand, the business owns the technology for the production of a special brand of textile, which belongs to the premium sector of products. The company aims to ensure the consistent quality of its product, which might not be the case with some of its competitors producing low-quality cheap goods.
On the other hand, the company’s success depends on the high-quality domestic fabric, the use of which will not be possible after moving the operations to China. There are multiple textile plants run by Chinese owners and used by competitors. Thus, to gain competitive advantage and ensure consistency in the fabric’s quality, it might be worth investing in the construction of a textile plant run by the company’s transnational managers. Overall, the competitive strategy should include the production of an exclusive brand of textile on the company’s owned plant and selling it in a premium pricing segment.
References
Baldegger, R. (2012). Management in a dynamic environment: Concepts, methods and tools. Springer.
Lynch, R. (2014). What is global management? Global Strategy. Web.
State Taxation Administration of the People’s Republic of China. (2019). Tax system. State Taxation Administration of the People’s Republic of China Website.