2010-03 BYD - Part 2 - Nancy and John

2010-03 BYD - Part 2 - Nancy and John - John K Binay(UID...

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John K. Binay (UID: 2009961582) February 18 th , 2010 BYD Build Your Dreams - Timing of market entry (Nancy) BYD’s propose to enter the United State market by the end of 2010. BYD believes that under the current financial and industrial conditions, there’s no better time to introduce BYD’s brand and quickly capture a share of the US’ automobile pie. Moreover, with the growing prominent of hybrid cars, the quicker BYD enters the market, the greater the extent it can exploit the first-mover advantage and really establish a presence in the US’ hybrid car industry. The recent negative publicity with Toyota Prius is also beneficial to BYD. - Options (John) A company which wants to enter a new country can choose from several strategies, among them are exporting, international licensing, international franchising, contract manufacturing, management contract, turnkey project, wholly owned subsidiary and joint-venture. We decided to analyze the advantages and disadvantages for BYD of three of these strategies (exporting, wholly owned subsidiary and joint-venture), as they are the most commonly used in the automobile industry. Exporting If BYD was to choose exporting as their entry strategy, they would select one or several distributors in America. These distributors, which are not part of BYD, would import the cars built by BYD in China. BYD would have no presence in America except maybe for an eventual office in charge of dealing with the importers. There are several advantages for exporting such as the relatively low financial exposure. Indeed, there is no necessary investment and BYD would ship their cars only on an order basis. Furthermore, BYD could acquire knowledge about the American market and see whether its products are well welcomed by American consumers. Finally, exporting permit a gradual market entry. However, there are major disadvantages as well. First of all, BYD cars would be vulnerable to the 2.5% tariffs the American government taxed on imported cars 1 . Then, it is logistically difficult and expensive to export cars on an order basis. To keep the cost of transport low,
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This note was uploaded on 05/02/2010 for the course ACCT 3756 taught by Professor Leung during the Three '09 term at University of Sydney.

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2010-03 BYD - Part 2 - Nancy and John - John K Binay(UID...

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