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Running head: ANALYSIS OF CHINA'S BUSINESS ENVIRONMENT Business Environment Analysis Report Analysis of China's Business Environment U5987944 Australian National University BUSI2025 – Jan 2019
ANALYSIS OF CHINA'S BUSINESS ENVIRONMENT 2 Executive Summary As the world's second largest economy after the USA, China has become an attractive market for many multinational companies that look to expand their business overseas. Hypothetically, Woodside Petroleum, a mining company in Australia wishes to expand its business to China. This report analyzes how the changes witnessed in China's business environment would influence the future development of Woodside Petroleum Company in the Chinese market. Communication issues are prevalent in the social and cultural environment with China’s 5,000-year cultural heritage. However, the foreign direct investment and China-Australia free trade agreement promoted by World Trade Organization would create both threats and opportunities for the Company due to concerns in oil security and the costs of imports while broadening the global market for oil. Regardless, the consistent growth of China's economy implied that the demand for mineral resources will be higher as well as the cost of labor. Notably, given the fact that China has a sound and stable exchange rate, this would be advantageous to Woodside Petroleum because currency fluctuations will be minimal while avoiding devaluation. I recommend that Woodside Petroleum expand its operations to China as the Chinese market is ripe with immense opportunities. For Woodside Petroleum to successfully exploit the Chinese market and quickly gain competitive advantage, the Company will make sure that the hired employees are able to speak both Chinese and English in order to bridge the communication gap. Equally, the company will need to successfully manage any political risk while outsourcing services of capital management companies such as Fosun International Limited to mitigate any financial risk that may arise.
ANALYSIS OF CHINA'S BUSINESS ENVIRONMENT 3 Overview As the leading supplier of oil and gas in Australia, Woodside Petroleum is an Australian Company with its headquarters in Perth. Founded in the year 1954, Woodside Petroleum has more than 3597 employees in Australia including others from all its subsidiaries with a huge amount of oil, coal and gas assets. Currently, the company has expanded overseas to countries such as New Zealand and it is tipped to expand more in the coming days due to rapid growth in revenues and assets. Notably, in the fiscal year 2017, Woodside Petroleum recorded a total revenue of $5,057,089,000 while producing 6% of global LNG supply. With the consistent growth of China's economy, the demand for mineral resources more specifically gas and oil are increasing ( Dixon, 2017). Thus, this paper will analyze China's business environment in order to determine the viability of Woodside Petroleum's expansion strategy to the Chinese market and

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