Discussion Board 4 – International Business
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Discussion Board 4 – International Business
Boeing and other companies should go along with China terms; as such, a business venture will bring together different skills and talents. Boeing will benefit from local labor provided by the government, land rights and a building to run their business. Boeing in return will bring in technology, equipment and capital. They will have to come into an agreement with the Chinese government on division of profits, who will own the property when the contract comes to an end and how they will share risks and losses. The reason why the China government uses this method is to bring together modern management skills to assist in economic development (Harrigan, 1999). This usually helps the China government to get advance expertise on modern management skills and technology. It also assists China as a country to get better market for their export of goods and services. These joint ventures help China acquire advanced technology, they also make a profit from such business ventures, and they are able to get modern expertise knowledge. The main objective of the Chinese government is to acquire modern management skills and technology especially in areas of electronics. Foreign investors like Boeing and other companies will provide technical knowledge especially in areas of engineering, providing technical and management skills. (Yan & Child, 2000). China is seeking foreign marketing skills in order to enhance their marketing skills and technology from foreign companies.
The transfers of technology into such a country as China from foreign companies gives China tools to assist them solve problems. China is able to learn modern technology from foreign companies. An advantage Boeing will have in agreeing to such a joint venture with China is that they will be able to penetrate the China market more quickly. Another advantage is that Boeing will have marketing rights (Zhou 1999).
China’s government enters into such joint ventures to make profits from foreign companies. Majority of government owned companies who do joint business ventures with foreign business companies are able to compete with already established local organizations. The China government is encouraging joint business ventures with foreign companies to enable strengthened economic relations. China can expand its economy, technology and modern management skills while providing a good investment opportunity for the foreign company.
China’s political structure and economic system are based on communism. Companies in China are deeply rooted in traditional management systems. Most industries are owned by the government, and they do not have specific owners. This makes accountability of managers in most industries difficult.
Boeing will benefit from this joint venture as the government protects them from risks that are caused by either politics or economical risks. This joint venture with the China government will assist them reduce environmental uncertainty (Barkema, 1997). Having joint ventures with China, Boeing will not face serious challenges like understanding the local business environment, and they will be able to run their business smoothly and make profits. This in return will make Boeing highly dependent on the China government.
Boeing and other companies should not risk losing sales by refusing transfer technology they have to ensure that the government will give them significant market access, infrastructure and premises. They have to be careful with their patent and trademarks so that they do not lose control over them. Boeing has to employ one of the managers from their own people. This will assist Boeing to make sure that they standard of working is maintained. Boeing and the China government should come up with a clear exit strategy. Although investing in China has more benefits to the government, Boeing will make adequate profits from the business venture.
Reference
Barkema, H.G., O. Shenkar, F. Vermeulen, and J.H. Bell, 1997, “Working Abroad, Working with Others: How Firms Learn to Operate International Joint Ventures”, Academy of Management Journal 40, 2, pp. 426-442.
Harrigan, Kathryn R. (1999). Strategies for Joint Venture Success. Lexington, Mass; Lexington Books.
Yan, Yani, John Child and Lu Yuan (2000). Ownership and control in international business: An examination of Sino-foreign international joint ventures, Paper given to Academic of Management Annual Meeting, Vancouver.
Zhou, Xin. (1999) China’s national economy grows well, Beijing Review. December 2-8:21.
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