Country Risk Analysis Team Paper

Country Risk Analysis Team Paper - Country Risk 1 Country...

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Country Risk 1 Country Risk and Strategic Planning Analysis Gina Manalo Gabriel Ratcliffe Hector Sierra Manuel Flores University of Phoenix August 30, 2007
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Country Risk 2 Country Risk and Strategic Planning Analysis Opening up a business in another country can be risky. There are many risks involved in this type of venture. McDonalds has been successful in the United States and this is due to McDonalds realizing a need and implementing that need. Opening a McDonald’s chain in China will be a challenge and many risks involved and a strategic planning analysis will have to be done before this venture can proceed. One of the biggest obstacles that will be facing McDonalds will be the Communist Country itself. The cultural differences, competition, distribution and control are the other challenges. When dealing with a communist state, a company, like McDonalds, must realize that China would like to have some type of control and monetary rewards. Even though dealing with a communist country may contain a huge risk, the benefits of opening a fast food chain like McDonalds in China can be rewarding. More than a billion people live in China that is a huge consumer pool waiting to be tapped. The benefits outweigh the risks; there will be political, legal and regulations that will need to be addressed. The Chinese government lacks predictability in its business environment due to lack of a consistent body of laws and regulations. There exists corruption on all levels and every district will have its own laws and interpretation of the laws. The Chinese government will set certain laws into place and contracts will be addressed in order to appease other countries but in reality other types of payment will be asked for (American Management Association, 2007). McDonalds knows the risk involved in dealing with a Communist country. Under and behind the laws exist the payments that are not known about in the open. China has a government that has made a partial transition to a market economy but parts of its bureaucracy still tends to protect local firms and state-owned firms from imports while encouraging exports.
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Country Risk 3 The practices of the Chinese government are to get as much as possible from companies while portraying to be the friendly business country. McDonalds will need to invest and investigate the market situation or perform the necessary risk assessment to be successful. Most United States firms sign contracts and build relationships in order to make the endeavor work. In China, a contract is like a prenuptial agreement and in this agreement, the idea is who gets what when things do not work out as planned. To be successful in China, businesses need to develop the commitment beforehand (FasOnline, 2007). Kentucky is China’s favorite fast food, giving McDonald a run for their money.
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This note was uploaded on 04/23/2010 for the course BUSINESS 551 taught by Professor Charnell during the Spring '10 term at University of Phoenix.

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Country Risk Analysis Team Paper - Country Risk 1 Country...

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